Farming leaders have criticised the government after it included details of proposed changes announced in last year’s Budget in its Finance Bill. It also published a so-called impact assessment, in which it claimed that the proposals, which will see family farms paying an additional £100,000 a year in tax for ten years following the death of the previous farm owner, will not have ‘any significant macroeconomic impacts’.
However, the same week new data revealed that confidence in the farming industry is plummeting as a result of the policy, together with new tractor sales falling to their lowest level since 1998. As part of its assessment, the government admitted that the policy ‘will have an impact on families going through bereavement and those planning for succession, where the estate has an increased inheritance tax liability as a result of this measure’. But it also claimed the reforms are ‘not expected to have a significant impact on family formation, family stability or family breakdown’ and suggested that any impact on domestic food security could be offset by sourcing ‘imports from international markets.’
In response to the documents, Country Land and Business Association (CLA) president Victoria Vyvyan said, “This government is incapable of listening. The ending of vital inheritance tax reliefs will crush farming and family businesses, but the Treasury remains deaf, blind and indifferent to the damage to the economy.
“The CLA has made clear, and costed, the consequences of this ideological folly; the loss of jobs, the reduction in GVA. Together the industry has offered a sensible alternative via the ‘clawback’ mechanism. The Treasury has given no reason for failing to consider an alternative.
“This is not an impact assessment; it reads like an amateur note from an arrogant government setting and marking its own homework and simply not understanding businesses and food security. To be clear, this is a tax burden on businesses, not wealth, delivered without consultation and with derisory engagement. Farmers and family businesses are the backbone of the economy and deserve to be heard by a government that seems hell-bent on pressing ahead, indifferent to the slow but inevitable train crash.”
One glimmer of hope is that the government also outlined plans to hold a technical consultation on the draft legislation, including on inheritance tax, to ensure it ‘works as intended’. The National Farmers Union (NFU) said it would hold ‘the government to account on every element of this policy.’
NFU President Tom Bradshaw commented, “At the heart of this battle are the elderly farmers who have devoted their entire lives to growing food for the country and supporting their rural communities. They should not become collateral damage.
“To see them face such uncertainty, knowing the legacy they and their families have worked hard for and grown could be ripped away by this tax, is heartbreaking. I cannot begin to imagine the fear many must be feeling right now – their homes, their livelihoods and everything they’ve worked for is under threat.”
The NFU also criticised Chancellor Rachel Reeve’s continued refusal to meet industry representatives to discuss the policy. “Despite our persistent efforts, [she] still refuses to meet us to discuss our alternative ‘clawback’ proposal. The Treasury claims our solution will raise less revenue but is refusing to release the modelling on how it came to this conclusion,” Tom added.
“This issue goes far beyond farming. The food and farming sector supports millions of jobs, fuels our domestic food supply and contributes billions to the UK economy. When you undermine farm businesses, you undermine a vital part of our national infrastructure. If this legislation goes ahead, it will unquestionably have devastating and irreversible impacts on the country and it is so poorly designed that it will inevitably have to be changed in the future.”
Further criticism of the policy came from Steve McLean, M&S head of agriculture and fisheries, who told BBC Wales the policy will “definitely” be a “deterrent for young people coming into the industry”. Speaking at the Royal Welsh Show, he added that M&S was “very, very clear” that agriculture should be treated differently by the government.
“The whole taxation system was devised to recognise that the margins of profitability in agriculture weren’t like other industries,” he said. “That’s why you had a difference in how the inheritance tax approach was set up.”
