Inheritance tax shake-up threatens food security, say farmers
Polling by the Department for Environment, Food and Rural Affairs (Defra) found that confidence in ministers among farmers had dropped by 11 per cent in the year since Labour came to power. Many of them cited the overhaul of inheritance tax as a threat to their way of life.
Farmers told the government they were 'feeling let down', that there was a 'lack of trust' and a 'need for transparency'. The report said: 'There was a sense that it would take a long time to rebuild this trust and, overall, a feeling of dissatisfaction with current policy.'
It found that farmers felt food security would be put at risk 'due to farms closing because of policies such as making some farm businesses subject to inheritance tax'.
Farmers also feared the changes would make their business 'unviable' and they would be less likely to invest in their farms because it could push them over the limit to pay the levy 'as they felt that it would be lost rather than staying in the family'.
'A few said that due to changes to inheritance tax they would drop nature friendly farming practices and 'extract as much value' from their farms as possible before selling up and retiring to live off the proceeds,' it said.
The chancellor cut the amount of inheritance tax relief available to family farms in her October budget.
Under current plans, a 20 per cent inheritance tax will be levied on agricultural assets worth more than £1 million for the first time from April next year. Ministers argue that other tax exemptions mean a couple would be able to pass on a family farm worth up to £3 million tax-free to their children, but critics say some family farms could still be hit.
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The poll found that 54 per cent of farmers were 'not at all confident' that their relationship with ministers would develop positively in the future, which is the highest proportion since the question was first asked. Last year 45 per cent said they were not at all confident.
Mo Metcalf-Fisher, of the Countryside Alliance, said: 'Many farmers feel incredibly anxious about their livelihoods, largely as a result of October's budget.
'Any instability in the sector is a much wider problem for the UK, not just for our food security but the wider economy. The government must urgently reset its relationship with the countryside and farming sector and find a way forward before we lose more family farms.'
Data released earlier this week showed a record number of farms have been forced to shut this year. In total 6,365 agriculture, forestry and fishing businesses closed over the past year, according to the Office for National Statistics. The figure is the highest since quarterly data was first published in 2017.
Daniel Zeichner, the food security and rural affairs minister, said: 'Our dedication to British farming and food security is unwavering, allocating a record £11.8 billion to sustainable farming and food production over this parliament, and we have appointed former NFU [National Farmers' Union] president Baroness Minette Batters to recommend further reforms to boost farmers profits.
'The findings today show the strong momentum behind nature-friendly farming, backed by the high level of uptake in the latest round of capital grants. Environmental land management schemes are the best tools to support the sector's transition to sustainable food production and profitability.'
A Treasury spokesman said: 'Most estates claiming agricultural and business property reliefs will be unaffected by the changes. The latest data shows that 40 per cent of agricultural property relief — worth £219 million — was directed to just 117 estates. The money raised will go towards public services we all rely on every day instead.'
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