Family farm 'turmoil' over inheritance tax

Yahoo

3 days ago

Inheritance tax changes announced by the chancellor last October have thrown Welsh family farms into "turmoil", a farming union has said.
The plans to tax inherited agricultural assets worth more than £1m at a rate of 20% were announced in Rachel Reeves' first Labour Budget.
NFU Cymru President Aled Jones told MPs, on Wednesday, there was a need for "compassion" as "vulnerable people" were in the "eye of the storm". He suggested there was another way the Treasury could raise the £2bn a year involved.
The UK government has defended its inheritance tax reforms, describing them as "vital".
There were protests across the UK after the Budget announcement, in October, that inherited agricultural properties worth more than £1m would be subject to inheritance tax at 20% - half the usual rate - from April 2026.
The UK government has said the changes will only affect the wealthiest 500 farms each year, but farming groups argue as many as 70,000 could be affected.
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Mr Jones told the Welsh Affairs Committee farming families were "going through some very difficult conversations, particularly when there are older members at a stage of life who find it very difficult to deal with these issues".
"The announcement last October has thrown lots of these family businesses into turmoil," he said.
"I ask for compassion for these people - they need to be taken from the eye of the storm."
Mr Jones said farming union leaders had suggested to the Treasury an alternative approach, the introduction of a "clawback mechanism" on money raised from selling land when it is not to be used for food production.
"That money should, in my opinion, be taxed.
"If you like, tax it at 40%, rather than 20%. These are the mechanisms that are operational in other countries.
"A farmer transferring from one generation to the other, there's not a single penny that arrives in their pockets.
"It's something really to continue that farm business for generations to come."
The UK government maintains that under its changes three quarters of estates would continue to pay no inheritance tax at all, while the remaining quarter would pay half the inheritance tax that most people pay.
Ministers say that that payments could be spread over 10 years, interest-free.
Senedd Welsh Conservative shadow rural affairs secretary Samuel Kurtz said: "Labour's family farm tax threatens lives and livelihoods in rural Wales undermining generations of hard work and threatens the breakup of the family farm."