UK farmers are demanding inheritance tax on agricultural assets is axed ahead of Chancellor John Healey’s first budget.
Farmers staged a protest in Newbury in Berkshire this week to highlight concerns across the industry at the levy which has hit family-owned farms hard.
It was initially proposed that a 20% tax would be charged on inherited agricultural assets valued at over £1 million, but that figure was increased to £2.5 million in December ahead of the measure coming into force in April.
Critics have warned that the tax would force families to sell off land that they had farmed for generations, as well as putting Britain’s food security and the environmental protecion of the countryside under increased threat.
One of the protesters at the tractor rally in Newbury told the media that Britian’s farming industry was a ‘ticking timebomb’ and that the government had ‘one last chance’ to save family farms.
A government spokesperson said it valued ‘hardworking farmers’ and that the raised threshold would ‘protect small family farms and businesses while ensuring the largest estates make a fair contribution’.
The Autumn Budget will be announced by the Chancellor on 28 October.
Since April this year there has been 100% relief on the first £2.5m of combined agricultural and business property, with a 50% relief on value above that cap.
Previously this tax relief had been 100%.
Dan Willis, who runs Rookery Farms near Newbury, organised the protest told the BBC: ‘We can’t invest in the future. We are facing such difficult problems with the geopolitical landscape that going forward at the moment is impossible.
‘We are legitimately trying to run a business but at the moment there’s better odds in Las Vegas.
‘I don’t want to have to take all these tractors back to London on budget day, but if we’re not listened to they’re going to come back to London.’
When asked about the watering down of the tax changes he added: “It’s not enough. You’re taking people’s livelihoods away.
‘These farms have been farmed for generation after generation. I’m the fifth generation. Unfortunately, this type of tax is what can wipe it out.”
A government issued a statement which said: ‘We listened to farmers and raised the relief threshold to £2.5 million to protect small family farms and businesses, while ensuring the largest estates make a fair contribution so we can deliver support for families and businesses, including cutting the cost of living.
“We have boosted funding by £65m to help farmers manage drought pressures, protect crops and strengthen resilience for the future.”
In September, 100 MPs signed a letter calling on prime miniser Andy Burnham to reverse the inheritance tax changes.
Labour MP Markus Campbell-Savours backed a U-turn.
He said: “The government must deliver on its farm profitability plans, reconsider the fertiliser tax but also deliver one final U-turn and scrap its plans to abolish agricultural property relief.
“Although many of my farmers tell me the earlier U-turns made a substantial difference, others are still deeply worried about the impact this policy will have when passing a sustainable farm business to the next generation, especially those farms who have shown me expensive farming equipment vital to their work which quickly takes them over the tax threshold.”
Speaking ahead of the Budget, NFU president Tom Bradshaw said more measures were needed to help safeguard food security and boost economic growth.
Specifically, he referred to the Annual Investment Allowance which enables some businesses to deduct up to £1 million on qualifying assets from their profits.
Speaking to Farmers Weekly, the National Farmers’ Union called for the allowance to apply to buildings and critical farm infrastructure. The NFU also wants to see funding for temporary interest-free loans to help ensure that domestic food producers are not placed at a disadvantage to imports as a result of a levy on fertiliser imports due to come into effect next year.
NFU Deputy President Paul Tompkins said: ‘If government is true to its word that ‘food security is national security’, then the Chancellor must announce measures at the Budget that actually reduces the cost of producing food, not increases it, builds resilience in the sector and restores farm business confidence.’
