‘Farmers aren't death duty dodgers – we can't afford to pay inheritance tax'

Telegraph

19-11-2024

In Cumbria, fifth-generation organic dairy farmer, James Robinson, has been racked with worry since Budget day, when Rachel Reeves unveiled
'Whatever they say about protecting family farms, we won't be exempt from the tax, even on a farm of our size – 300 acres,' he says.
The Chancellor's changes to both 'agricultural property relief' and 'business property relief' have lit a fire under rural Britain.
Westminster is on Tuesday ringing with the sound of protest as farmers descend on the capital to make their voices heard.
British farming is already on its knees, and there is anger and confusion about why the new Labour government has decided to single out this beleaguered community.
Robinson is in a partnership with his parents, and is now in the process of working out
Until the day before the Budget, the correct tax advice was to keep the asset until death. But this is no longer viable.
'We emailed our accountant before Rachel Reeves even sat down [on Budget day],' says Robinson. 'What worries me are the unknowns and how things might change again – and I can't see them changing for the better.'
The consequence for the Robinsons is not selling up,
Robinson's son Robert is 20, and since the announcement the family have begun discussing how to get him involved in the partnership. This course of action is essential – the farm could not afford a large tax bill.
'There physically wouldn't be the money in the business,' says Robinson. 'We're not farming because we want to dodge tax, or because we want to have a big investment that we can pass on in land – we have worked tremendously hard for it, with ridiculously long hours.'
'In 20 years' time it'll be me, Robert, and his son or daughter – the knowledge is slowly passed down.'
So, what is the Government trying to do with this policy? Is it maliciously designed to kill the family farm – or does it aim to catch out those who use agricultural land as a tax haven?
If it's the latter, says Tom Bradshaw, president of the National Farmers' Union, 'come out with it, tell us what you want to do [about it], and we will find a solution'.
He met Darren Jones, chief secretary to the Treasury, after the Budget. 'I looked him in the eye and said, 'what is the question you've asked yourself? If you give me the question I can tell you.' But he doesn't know the question.'
If, as is suspected, the Government intends to crack down on those who
In her Budget speech, Reeves said her reforms would 'continue to protect small family farms' and claimed three quarters of estates 'will be unaffected by these changes'.
But farmers are convinced that the Government has got its sums wrong.
Nearly one in five (17pc) of UK farms failed to make a profit in 2022-23, according to the Country Land and Business Association, while 59pc made a profit of less than £50,000.
Simon Gadd is another of the thousands of farmers across the country panicking about what the future holds. He's taken advantage of unseasonably warm November weather to drill winter wheat and beans.
The view across his Lincolnshire fields is idyllic, but Gadd is trying to work out just how his family would be able to
With his father, he runs his family's 400-acre farm near Boston, where the Gadds have farmed since the fens were drained.
The family certainly cannot afford a tax bill of the magnitude that would be created by the new policy – even if land locally sells for an 'unusually cheap' £11,000 an acre.
The answer is likely to be a life insurance policy, or a mortgage, but both incur extra costs. He doesn't understand what Reeves is trying to achieve with this policy: 'She said that none of these taxes would go on to working people.'
But if Gadd – one half of a two-man band, who is not just a farmer but a mechanic, a marketer, a handyman, an electrician, and a father too – isn't a working person, then who is?
Last year, so much of the Gadds farm flooded that they were only able to harvest 60pc of their wheat, and as such did not make a profit.
'This policy change is going to impact almost every single viable farm,' says Joe Evans, vice-president of the Country Land and Business Association (CLA).
'The 7pc [according to the Treasury, the total percentage of claims worth more than £2.5m] is wrong, and we stand by that.'
Modelling done this week by the CLA shows that inheritance tax bills could wipe out farming profits for a decade.
A 200-acre farm with an expected annual profit of £27,300 would face a tax liability of £435,000 – if paid off over a decade, the farm would have to relinquish 159pc of its annual profit to HMRC.
Bradshaw adds that, perhaps, 20 years down the line, 'you could see a place where, potentially, the industry can be more dynamic'.
But the loss in the meantime is likely to be staggering.
'There is a real risk that this will be an absolute disaster for the owner-occupier, 200 to 800-acre farmer. Family farms will be sold if this pervades,' says Evans.
As for food security, he says, 'there will be consequences. What may happen is that bigger, leaner holdings will swallow up the family farms, and some heavily invested food producers may become more efficient. But there is no way that you can cast this as a good thing for the rural economy overall'.
'It is pretty demoralising,' Evans says. 'The implications of this Budget will put further brakes on what is already a struggling part of the economy. It's so sad when so many of us want to do more with it.'