Why are Britain's farmers protesting over Labour's inheritance tax changes?
Farmers and their allies will begin to gather from midday on Tuesday for speeches outside Parliament. Industry leaders say the plan put forward by chancellor Rachel Reeves during her first Budget last October, is 'marching the UK into a food crisis'.
Police have warned attendees that they face arrest if they bring unauthorised tractors to Whitehall, as has been seen at previous events. This marks the first time such a warning has been put in place, with several tractors hitting the streets on central London in recent months.
A Metropolitan Police spokesperson said: 'It is a criminal offence to breach the conditions or to incite others to do so – anyone doing so may face arrest.' However, a limited number of agreed tractors have been authorised.
Organiser and farmer Olly Harrison has said the protesters will aim to explain to MPs 'the levels of investment needed in agriculture just to produce something simple like a pancake'.
Here's everything you need to know about the issue:
What are the changes to farm tax?
Previously, farming businesses qualified for 100 per cent relief on inheritance tax on agricultural property and business property.
But now the tax is being imposed on farms worth more than £1 million, with an effective tax rate of 20 per cent on assets above the threshold, rather than the normal 40 per cent rate for inheritance tax.
The Government says that the actual threshold before paying inheritance tax could be as much as £3 million, once exemptions for each partner in a couple and for the farm property are taken into account.
Why have the changes been brought in?
The government has said 'difficult decisions' had to be made to fill a £22 billion fiscal hole it inherited from the Conservatives, and it is targeting the agricultural inheritance tax relief to make it fairer.
It said figures showed that 7 per cent of the wealthiest estates account for 40 per cent of the total value of agricultural property relief, costing the Treasury £219 million.
How many farmers will be affected by the changes?
According to the Treasury, some 27 per cent of estates claiming agricultural property relief (APR) were above the £1 million threshold in 2021/2022, suggesting that nearly three-quarters of farms would not fall within the scope of the charges.
The Treasury says around 500 estates a year are expected to pay inheritance tax under the changes.
However, the National Farmers' Union (NFU) says farm businesses have also qualified separately for business property relief, which can cover things such as harvested grain and livestock, machinery and diversified businesses such as camping on a farmer's field.
Now the two are combined, with a single £1 million allowance before inheritance tax is levied, which could mean more farms are in scope.
The NFU points to figures from the Environment Department (Defra) showing that 66 per cent of farm businesses in England have a net value of more than £1 million.
But the government has countered that analysis, saying that looking at asset value alone does not necessarily mean the farm will be affected, as it depends on individual circumstances.
Why do farmers say the changes are a problem?
According to the NFU, while farms may have a high nominal asset value – the value of their land and business assets – the returns from farming are often very low, so farming families may not have the reserves to pay for inheritance tax liabilities without selling off assets.
The NFU's president Tom Bradshaw said the change had left elderly farmers in the 'cruellest predicament', as they may not live for another seven years to take advantage of exemptions for gifting assets, or to hand over assets in a way that qualifies for the gifting exemption.
He has also warned the changes could undermine investment as farmers will be wary of increasing the balance sheet as they will be liable to pay inheritance tax on it.
There are also concerns that it could affect tenant farmers if landowners no longer benefit from having a tax exemption for farmed land.
Mr Bradshaw said there was a feeling among farmers that the Government did not understand food production.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Guardian
17 minutes ago
- The Guardian
More applause for Nicola Sturgeon, please
While I await an assessment of Nicola Sturgeon's career from a non-unionist perspective from the fair-minded Guardian, I'll take issue with Martin Kettle on just one of his criticisms (Nicola Sturgeon's immense political talent is undeniable, 14 August). He states that Sturgeon's 'gender recognition reforms were dogmatic and divisive'. After lengthy consultation, the gender recognition reform (Scotland) bill was passed by the Scottish parliament with a significant majority, the Conservatives being the only party voting against. If it had been enacted, Scotland would have aligned with the majority of European countries on this issue. However, the UK government used section 35 of the Scotland Act to stop it. So the dogma and divisiveness came from the UK, not Sturgeon or the Scottish government, and Scotland and the UK remain conservative outliers in Europe with regard to trans WarburtonEdinburgh It was the fact that Nicola Sturgeon was a personable working-class woman with strong values that made the contrast between her and Boris Johnson so stark. Is it her support for independence that led to cold treatment in the British media? The headline on Martin Kettle's article suggests so. But this raises the question of whether being pro-union is really less nationalistic than being pro-independence. In any case, many Scots remember Nicola fondly, something that can't be said for many of this island's recent political MacraeInverness Have an opinion on anything you've read in the Guardian today? Please email us your letter and it will be considered for publication in our letters section.
The Guardian
17 minutes ago
- The Guardian
How Rachel Reeves can raise money and also make the tax system fairer
The chancellor is missing an open goal by looking at inheritance tax while searching for the elusive billions needed to fix Britain (Treasury targeting inheritance tax reforms to help plug UK deficit, 12 August). The tax needs significant reform to make it fit for the 21st century, but it isn't the magic bullet the government is after. At the budget, Rachel Reeves could generate tens of billions of pounds by making tax changes that are overwhelmingly popular with the public and would be paid only by those with the broadest shoulders. Three-quarters of us want a wealth tax on net fortunes over £10m (backed by world-leading economists). Equalising capital gains tax with income tax is favoured by the majority too. The problem is that currently there's a Britain for the haves, and a Britain for the have-nots. If you get an income from extreme wealth (often inherited or accumulated through 'passive assets' such as property or investment), you get preferential treatment over people who work as a cleaner or a nurse, or in a warehouse or classroom. Just look at when Rishi Sunak released his tax return. He is from one of the UK's 350 richest families, yet paid the same effective tax rate as an average teacher, despite having income more than 50 times higher. That doesn't sound fair to me, and it won't sound fair to millions of people across the country who are struggling to get by and fed up with politics working for the rich and powerful over everyone BoswellHead of advocacy and policy, Tax Justice UK Labour clearly has the interests of the 1% at heart above all others. Inheritance tax is hated by most; it appears to be a tax on ambition. Work all your life and, when you die, the government comes along and helps itself. In contrast, it is easy for the 1% to avoid it, using trusts, hiding assets offshore and there are even insurance policies that pay out if your estate is hit by IHT. Yes we need a wealth tax, but an even easier choice is simply to equalise capital gains and dividend tax rates with income tax and national insurance, and remove the additional capital gains and dividend tax allowances, so everyone gets a single £12,570 personal BowserHolmer Green, Buckinghamshire Amazingly, there are people who think somebody earning £20,000 a year should pay tax, while people who inherit £200,000 shouldn't. Alan FairsBewdley, Worcestershire Have an opinion on anything you've read in the Guardian today? Please email us your letter and it will be considered for publication in our letters section.
BBC News
an hour ago
- BBC News
Fears horse racing betting tax proposal could hit Newmarket
There are fears a proposed betting tax hike could damage the historic home of horse government is proposing to increase the 15% tax rate paid on horse racing bets, aligning it with online gambling and casinos, which are currently taxed at 21%.People in Newmarket, Suffolk, which has a long association with the sport, feared this could negatively impact the town and result in fewer people working in the industry.A spokesperson for the Treasury said the UK's gambling tax system was "outdated and inconsistent". Research from the British Horseracing Authority warned the tax hike could cost the sport £330m over five years and threaten 2,752 jobs in the first year. Horse racing is the second-biggest spectator sport in Britain behind football, and it was feared the hike would lead to less promotion and sponsorship of the sport, worse odds and reduced bonuses for customers, ultimately making it less attractive. Stuart Williams is a Newmarket horse trainer and felt the tax increase was a "real threat".He argued that since casino slot machines were often made in other countries, there was no large industry behind its operation."The horseracing industry is a huge industry, a world-leading industry that creates inward investment for this country, millions and millions of pounds worth of investment and creates a huge amount of work for the rural economy," he added. Steve Elsom, chair of Love Newmarket Business Improvement District (BID), said the wider Newmarket business economy could similarly feel the effects of the tax increase on bookmakers."If bookmakers decide they are going to spend less of their revenue in racing, that will have an obvious effect on towns like Newmarket," he said."There are half a dozen bookmaker premises in town, but more broadly they spend a lot of money in and around the horse racing sport."Horse racing is the second most-watched sport in the UK, but gets very little column inches."So any diminution of money going into racing will have an adverse impact." 'Make it harder' Vicky Snell, who owns Victor Victoria Coffee in Newmarket, said she saw an increase in business during race meets."I think it will change the landscape," she said. "Stables will probably have to cut their work staff, which means less people coming in on a daily basis, so it's not all about the racing."I think it will make it harder within Newmarket." The government is looking to bring existing online betting duties into one single rate.A Treasury spokesperson said: "The UK's gambling tax system is outdated and inconsistent, which is why we are consulting on how to level the playing field so all online gambling pays the same rate, working closely with the horse racing sector."The Treasury added there were no plans to change the ways bets are made at racecourses, which are exempt from any tax. Follow Suffolk news on BBC Sounds, Facebook, Instagram and X.
