Following on from the Budget, why shouldn't Farmers pay inheritance tax like the rest of us?

[TIGHTCHOKE]

I'm genuinely interested as to why the farmers feel they are a SPECIAL CASE?

 

The NFU don't appear to be doing much so far either.

[39TDS]

A viable farm needs to be about 200 acres, at £10k/acre that is £2million.

The house, buildings machinery etc are going to add up to another million.

If the owner dies and hands it down there is a £400k tax bill under these new rules where there was none before.

That farming business is going to have to sell land to pay that bill, it then becomes unviable as there is no longer enough land to support the business.

This means the whole farm gets sold, no more farm, no more farmer, no more food. This will destroy the countryside as we know it.

There are ways to plan for these things, you can hand over to the next generation and pay no tax providing you survive 7 years but nobody of any age can be sure of that.

If the farmer dies young there's a good chance he hasn't gifted to his (or hers) offspring yet as they are maybe not old enough, that farm has gone.

Up until the budget it made great sense to die while still owning the farm and every accountant would say so, new rules mean there are 80 year old farmers with no hope of surviving 7 years if they gifted immediately so that farm has gone.

The figures I use are minimum, that size of farm is already struggling to pay its way.

The tax raised won't amount to a massive amount and it is more a tax of spite, same as taking winter fuel payments away.

As for the NFU, they represent the supermarkets not the farmers and that has been the case for some time. Having said that Tom Bradshaw (head of NFU) did release a very sensible statement on the matter.

Starmer knows all this and said as much very recently

 

[oldypigeonpopper]

Hello, I think it is more about keeping the Farm Families tradition on handing down to next generation eg Son/Daughter to carry on with their Farm and not about Money but I can see from both sides when some Farms are worth multi millions like my friends farm but any with an Urban Farm I can see many selling up !!!! Although in about 10 or 15 years  on my friends farm TWA are going to be putting in a new Road !!!!!! , Taking around 200 Acres, But as happens  I doubt will see this happen, or the New Reservoir that will make Farmoor look like a Puddle 😄 

Edited November 9 by oldypigeonpopper

[enfieldspares]

It, APR, or Agricultural Property Relief, was introduced in 1984 so it didn't as far as I know exist before then. This was three years or so into the first Thatcher government. The unintended result was of course that as it became an asset that could be left with Inheritance Tax avoided that the price of farmland skyrocketed on the open market. 

The idea behind it, APR, was that those that have large landholdings may be asset rich but can only realise that asset by selling parts of it off. So in fact then reducing the size of the farmholding until it is no longer viable to be farmed.

But as you say the same could apply to a person with their only property being a three bedroom house in London SW1. You can't realise cash, as the inheritor (who like a farming family may be the son who has lived in it all their life) by selling off half of one wall. Or a third of the roof tiles. So the property then has to be sold and the inheritor downsize if they cannot afford the death duties.

The old adage "cui bono" is a good test. Who benefits? Simply the main people that benefitted were the vast landowners of five thousand or ten thousand acre estates and that was probably the intention of the legislation but "disguised" as being a benefit to all farmers. What plays better to the listener? 1) We'll exempt all farm from death duties or 2) We don't want large five or ten thousand acre landowning dukes and earls to pay IHT?

What Labour appear to have done is make sure that (if you do the maths supposedly it is claimed) farms valued at under £3 million still won't pay IHT but those above £3 million will. Fair's fair IMHO. Why was my mother going to have her £450,000 estate subject to £85,000 IHT when the heirs to the sixteen thousand acres of the Duke of Rutland could claim APR?

Is it the politics of envy? Or just a closing of what had become an abuse of the supposed intent of the exemption? Gobbing off as did motormouth Clarkson about buying his farm to avoid IHT certainly was not exactly wise. Surprisingly folk at HMRC read the newspapers and listen to the television. I expect that they...HMRC...wanted it for a long time and have found a Labour Chancellor willing to do so.

Last, as another has pointed out, you can gift it if you have that seven years left. For as my old accountant used to say "IHT is an optional tax paid by those who distrust their families just a little bit more than do than they dislike leaving that same family to then have to pay money to the taxman".

Edited November 9 by enfieldspares

[Mr. Merkel]

Hypothetically speaking if I owned a farm inherited from my family to avoid this new inheritance tax when I pass, could I make the farm business and property a limited company.

With the buildings and land as assets of that company, my wife and children as directors/officers, so when I turn my toes up my wife or children simply take over the role as the manging director. 

Would that be possible, not ever having run my owned business I don't know.

[islandgun]

44 minutes ago, enfieldspares said:

It, APR, or Agricultural Property Relief, was introduced in 1984 so it didn't as far as I know exist before then. This was three years or so into the first Thatcher government. The unintended result was of course that as it became an asset that could be left with Inheritance Tax avoided that the price of farmland skyrocketed on the open market. 

The idea behind it, APR, was that those that have large landholdings may be asset rich but can only realise that asset by selling parts of it off. So in fact then reducing the size of the farmholding until it is no longer viable to be farmed.

But as you say the same could apply to a person with their only property being a three bedroom house in London SW1. You can't realise cash, as the inheritor (who like a farming family may be the son who has lived in it all their life) by selling off half of one wall. Or a third of the roof tiles. So the property then has to be sold and the inheritor downsize if they cannot afford the death duties.

The old adage "cui bono" is a good test. Who benefits? Simply the main people that benefitted were the vast landowners of five thousand or ten thousand acre estates and that was probably the intention of the legislation but "disguised" as being a benefit to all farmers. What plays better to the listener? 1) We'll exempt all farm from death duties or 2) We don't want large five or then thousand acre landowning dukes and earls to pay IHT?

What Labour appear to have done is make sure that (if you do the maths supposedly it is claimed) farms valued at under £3 million still won't pay IHT but those above £3 million will. Fair's fair IMHO. Why was my mother going to have her £450,000 estate subject to £85,000 IHT when the heirs to the sixteen thousand acres of the Duke of Rutland could claim APR?

Is it the politics of envy? Or just a closing of what had become an abuse of the supposed intent of the exemption? Gobbing off as did motormouth Clarkson about buying his farm to avoid IHT certainly was not exactly wise. Surprisingly folk at HMRC read the newspapers and listen to the television. I expect that they...HMRC...wanted it for a long time and have found a Labour Chancellor willing to do so.

Last, as another has pointed out, you can gift it if you have that seven years left. For as my old accountant used to say "IHT is an optional tax paid by those who distrust their families just a little bit more than do than they dislike leaving that same family to then have to pay money to the taxman".

Well put

[ditchman]

if this continues...virtually every farm in this country will be owned by some massive corperation....and the smaller farms will try and hack it out as market gardens or some other diversication

farmers can avoid this if they put the farm into a trust...or do the 7 year rule as mentioned before

there are good and bad things about this approach...........

[Charliedog]

May have to downsize on the number of rangerovers

[Red696]

Lets not miss the fact that they have 10 years to pay the 20% IHT, whereas others have only 28 days to pay 40% IHT.

 

oh those poor hard done to Farmers 😢

[39TDS]

1 hour ago, enfieldspares said:

What Labour appear to have done is make sure that (if you do the maths supposedly it is claimed) farms valued at under £3 million still won't pay IHT but those above £3 million will.

Is the threshold not £1million then?

22 minutes ago, Red696 said:

Lets not miss the fact that they have 10 years to pay the 20% IHT, whereas others have only 28 days to pay 40% IHT.

 

oh those poor hard done to Farmers 😢

I think the interest is charged at 9% on that.

 

In any case, why does any inheritance tax exist? Seems very unfair to me that they tax you for dying.

[oowee]

The farmers that I know with any sort of holding have put the farm into a company structure. Nice pension earner to retain a building and rent it back to the business. 

Of course if you are buying land specifically for the purpose of avoiding IHT that would otherwise be due then this change is nicely targeted. 

 

[Lloyd90]

As quoted this week … oh how difficult to inherit a multiple million pound asset and have to pay about £100k inheritance tax. 
 

Dyson, Clarkson, various Oligaph’s, owners of giant sporting estates, just a big tax avoidance. 
 

Perhaps now we will see the value of farm land more realistic against the food / resource it produces? 

[Red696]

5 minutes ago, 39TDS said:

Is the threshold not £1million then?

I think the interest is charged at 9% on that.

 

In any case, why does any inheritance tax exist? Seems very unfair to me that they tax you for dying.

 

they don’t tax anyone for dying, never have done…. It’s the living that get taxed, although I agree IHT should not exist.  It should fall under the Capital Gains tax regime were the tax is only payable if the gain is realised in a sale.

9% on 20% with an allowance of £1 million is still a better deal than 28 days at 40% on an allowance of £350,000

[39TDS]

6 minutes ago, Red696 said:

9% on 20% with an allowance of £1 million is still a better deal than 28 days at 40% on an allowance of £350,000

Still means the end of the business and livelihood but I think more importantly means the end of that family farm. As Kier said "It can't come back", I really do think that should be a national concern but nobody seems to care.

 

That £350k is £500k if left to offspring.

Edited November 9 by 39TDS

[Red696]

11 minutes ago, 39TDS said:

Still means the end of the business and livelihood but I think more importantly means the end of that family farm. As Kier said "It can't come back", I really do think that should be a national concern but nobody seems to care.

 

That £350k is £500k if left to offspring.

“Family Farm” or in truth Family Business…. Not sure any other Family Business benefits from the same taxable rate & allowance?

Yes £500k to offspring @ 40% taxable rate.  Now lets pretend “Family Farm” is not a busines, so is £500k fair in comparison to Farmers? 
 

 

[Weihrauch17]

20 minutes ago, 39TDS said:

Still means the end of the business and livelihood but I think more importantly means the end of that family farm. As Kier said "It can't come back", I really do think that should be a national concern but nobody seems to care.

 

That £350k is £500k if left to offspring.

If property is included.

[islandgun]

Its quite simply a wealth tax, take from the rich and pay for whatever "deserving" cause would most curry favour with cronies this week  

[bruno22rf]

I think that farmers should readily agree to pay inheritance tax as soon as members of the Royal Family do.

[Weihrauch17]

18 minutes ago, bruno22rf said:

I think that farmers should readily agree to pay inheritance tax as soon as members of the Royal Family do.

Did you watch the C4 documentary on what the Royals own and pay no tax on huge rents, truly astonishing.

https://www.bbc.co.uk/news/articles/cg4l1lzv2nro

[oldypigeonpopper]

1 hour ago, Weihrauch17 said:

Did you watch the C4 documentary on what the Royals own and pay no tax on huge rents, truly astonishing.

https://www.bbc.co.uk/news/articles/cg4l1lzv2nro

Hello, I watched this, Who would have thought the King and Son could get so wealthy even when they get millions from the Tax people pay

[Weihrauch17]

37 minutes ago, oldypigeonpopper said:

Hello, I watched this, Who would have thought the King and Son could get so wealthy even when they get millions from the Tax people pay

And who they make very large amounts on money from (on land that was stolen centuries ago) at  the Taxpayers expense.  The NHS, Schools, Charities and the MOD plus destructive Mining projects despite Charles portraying himself as a rabid environmentalist.  Owning the Foreshore and sea bed out to 12 nautical miles they make a fortune from wind turbines at sea and cables running on the sea bed adding to our ridiculous energy Bills. Utter corrupt Hypocrites in my book.

Edited November 9 by Weihrauch17

[morgan]

60% of farms sold in Wales last year were sold to non farmers ie. developers, corporations and agribusiness. Much better for food security, localism, community and biodiversity that land ownership remains in private hands. What is this government thinking of ? All it is interested in the urban electorate - its an ill wind.

[old man]

Just the way of politics uk maybe? 

To look for something else to destabilise our core? The colour matters not but the intent to affect gives power?

[amateur]

6 hours ago, morgan said:

.....  All it is interested in the urban electorate - its an ill wind.

But of course.

No votes in the country or from savvy pensioners.

Just dole it out to the public sector, the last bastion (I think that's the word) of unionism

[bruno22rf]

9 hours ago, Weihrauch17 said:

Did you watch the C4 documentary on what the Royals own and pay no tax on huge rents, truly astonishing.

https://www.bbc.co.uk/news/articles/cg4l1lzv2nro

I think that it's disgusting, Charlie boy just got a £54 million increase when some elderly folk are freezing and living off food banks - how can this be in this day and age? We are living like slaves the same as we have always done but someday the tide will turn I'm sure.