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

[Vince Green]

29 minutes ago, oowee said:

 

The demand for new homes is coming largely from new household formations and an ageing population retaining homes. 

The demand in new homes is coming as a result of population growth and net migration is a massive factor. We haven't got a housing problem we have an increasing population. Housing is just one manifestation 

[oowee]

48 minutes ago, Vince Green said:

The demand in new homes is coming as a result of population growth and net migration is a massive factor. We haven't got a housing problem we have an increasing population. Housing is just one manifestation 

This from the ONS.

Growth in the number of households is fastest where the household reference person (HRP) is of older age; 64% of the total growth in households is accounted for by households where the HRP is aged 75 years or over.

The number of people aged 75 years and over living on their own is projected to increase by 461,000 in the 10 years to 2028.

Statistician's comment

“The latest household projections show a continued rise in the number of households in England, at a level closely in line with what was previously projected. There continues to be much variation across age groups, regions and household types. We project the majority of household growth over the next 10 years will be because of an increase in older households without dependent children, particularly those where the household reference person is aged 75 years and over. This shows the potential impact of an ageing population on future household formation.”

 

 

 

 

 

[armsid]

If all the farmland is sold off then there is no need for sgc/fac as there will be nowhere to use them

[Newbie to this]

8 hours ago, armsid said:

If all the farmland is sold off then there is no need for sgc/fac as there will be nowhere to use them

I don't use mine on farmland.

[Penelope]

16 hours ago, B686 said:

Yes theres a few about . All sorts are grown on that land . Wheat , barley , potato’s ,onions , lettuce. Probably end up another concrete jungle like Beaulie park. Shame as there’s a cracking 28 acre lake there nice little woods, even land that’s supposed to be of special scientific interest. But that won’t come into it as let’s face it we got to have homes for the invaders coming across the channel.

On the way to the shoot (Great Leighs) last weekend, I showed someone the new road from the Boreham interchange to Essex Regiment Way, where the McDonalds, et al, are.

He was absolutely flabbergast at the amount of development including the new train station.

[old man]

22 hours ago, countryman said:

We are only a small island with a growing Foreign population, the Government need land to build more houses on, you can not make it so farm land is in there sights.

That seems to be a general government view to feed the debt chain and profits that come from the house ownership obsession?

As regards food they know we can be made to suffer whatever import costs they decide as we are a captive market?

Win, win, win for them and their masters?

Just follow the money?

State farms for the bits left, stops the use for country pursuits as we are about to see shortly?

Edited November 14 by old man

[Scully]

15 hours ago, TIGHTCHOKE said:

No, I know a lot of Farmers.

As do I. 
Threads like this just smack of wealth envy to me, which is what the Labour party and their supporters, including their unions, are all about. When they see someone in their smart vehicle, rather than thinking ‘that’s something to aspire to’ ( if that’s your sort of thing if course ) they think ‘well soon have that off you chummy’. It smacks to me of the ‘why should they have that when I can’t afford it’ mentality, and I get it, I really do, but shouldn’t we be thinking ‘why are any of us paying inheritance tax’ rather than ‘why shouldn’t they’ ? 
I know oodles of farmers; I grew up in a very rural area and went to school with loads of farmers sons, grew up with them, and many are friends and one in particular is one of my closest friends. Yes, I know they have a reputation for being tight, and they’re always banging on about how poor they are and leaning out of their brand new Range Rover Sport, Q8 whatever window and telling you  ‘ aye, there’s nee money in farming anymore mate’.  🙄

The ‘asset rich cash poor’ adage doesn’t seem to prevent them finding the cash to buy that  ‘t’other larl house’, that brand new motor or that brand new tractor rather than pay tax. But it wouldn’t and doesn’t stop the rest of us either. I get it I really do. 
I know farmers who it is claimed still haven’t spent their first wage packet at the age of 80+, and know farmers who have come to blows with family members over land and money, and haven’t talked for decades, and sat on separate church aisles at siblings funerals because of that fall out over money decades ago. 
There are farmers who convert barns into dwellings for offspring, and pay those offspring minimum wage to work the farm. They have little cash but a new house, the bills for which go through the business, but they’re only working the system like the rest of us could and would given the chance. 
There are farmers out there with properties abroad, and I know several with multiple rental properties, including one in the Lakes who pulled up to us on his quad bike in Elterwater when we were putting up a village hall, who was looking for tradesmen to carry out work in his holiday let’s in the Lakes. 
Farmers work from dawn to dusk, 365 days of the year, and I wouldn’t want to do it. 
There is a genuine government agenda out there in my opinion. The Subsidies to cover the costs of food production were government created and in hand with the petro-chemical industries which provided the fertilisers, a huge industry was born to feed a nation. Along the way some landowners became very wealthy indeed, but those subsidies are going and with them will go cheap food; it is very expensive to produce food on the scale it is currently produced, and vast swathes of the population couldn’t afford it.
Think about it. What better way to make reparation and meet the legal obligation of ‘net zero’ this government signed up to than to pay those subsidies to poorer emerging economies abroad, to grow and supply us with affordable food? It doesn’t even affect the revenue of our petro-chemical industries because they won’t be supplying those chemicals to us, but rather to those foreign countries who haven’t signed up to net zero.
It’s a win win for our government, in more ways than one. 

This is not the the fault of our farmers, but rather our governments and those civil servants charged with finding solutions to government agendas. 

 

[B686]

2 hours ago, Penelope said:

On the way to the shoot (Great Leighs) last weekend, I showed someone the new road from the Boreham interchange to Essex Regiment Way, where the McDonalds, et al, are.

He was absolutely flabbergast at the amount of development including the new train station.

Apparently most if not all of the roundabouts and parts of the slip roads are being changed again in a couple of years. Nothing like spending millions and spending millions more changing it again.

[Penelope]

1 hour ago, B686 said:

Apparently most if not all of the roundabouts and parts of the slip roads are being changed again in a couple of years. Nothing like spending millions and spending millions more changing it again.

Must be about a third of the size of the existing Chelmsford!!!

[Newbie to this]

2 hours ago, Scully said:

but shouldn’t we be thinking ‘why are any of us paying inheritance tax’ rather than ‘why shouldn’t they’ ? 

This ^^^^ 💯%

[Dave-G]

My only property is a humble two bed semi.

There are some truly massive farm estates - surely producing vast incomes for a few rich families (nice if you can get it). Given they have such handsome incomes they should be able to afford to pay that tax pay their way towards the defence and other running expenses of the country - as do far less wealthy members of society.

[oowee]

3 minutes ago, Dave-G said:

My only property is a humble two bed semi.

There are some truly massive farm estates - surely producing vast incomes for a few rich families (nice if you can get it). Given they have such handsome incomes they should be able to afford to pay that tax pay their way towards the defence and other running expenses of the country - as do far less wealthy members of society.

I spoke to a farmer only today and asked him what he thought of the tax and he said ''If it's a problem they should get better accountants'' 🙂 

[islandgun]

1 hour ago, Newbie to this said:

This ^^^^ 💯%

Indeed, Being taxed for dying is truly the final nail in the coffin

[Scully]

16 minutes ago, Dave-G said:

My only property is a humble two bed semi.

There are some truly massive farm estates - surely producing vast incomes for a few rich families (nice if you can get it). Given they have such handsome incomes they should be able to afford to pay that tax pay their way towards the defence and other running expenses of the country - as do far less wealthy members of society.

They already pay their way towards the defence and other running expenses of the country, just like the rest of us. You can’t blame farmers for something the government created in the first place. 🤷‍♂️

[Yellow Bear]

7 minutes ago, Dave-G said:

My only property is a humble two bed semi.

There are some truly massive farm estates - surely producing vast incomes for a few rich families (nice if you can get it). Given they have such handsome incomes they should be able to afford to pay that tax pay their way towards the defence and other running expenses of the country - as do far less wealthy members of society.

With even  humble two bed semis going for 4/500,000 in some areas it is time the bar was raised on this tax if not abolished. My first house in Surrey (2bed cottage) ,sold at 5k when I moved north. was on the market for above 700k last year.  If I had stayed there this would have made my estate easily close to a million with my pension pot and a little other savings, making me filthy rich according to some, which I am not.  Simple politic of envy.

[Dave-G]

1 hour ago, Scully said:

They already pay their way towards the defence and other running expenses of the country, just like the rest of us. You can’t blame farmers for something the government created in the first place. 🤷‍♂️

Point taken  but rich folk are so well connected and have very capable accountants that get around paying a fair contribution of their income. Put another way, if they hadn't been so fortunate and well connected they'd not have had massive tracts of land handed down to them. It's no secret the extremely wealthy can afford to pay much more than the rest of us.

[JohnfromUK]

15 minutes ago, Dave-G said:

very capable accountants that get around paying a fair contribution of their income.

That is because the legislation is full of 'loopholes' and not fit for purpose.  In fact much of the tax legislation os grossly complex and an utter shambles, compiled by an incompetent and shambolic Civil Service and passed by a Parliament who mostly have no 'financial training' and don't really understand the 'small print'.

 

15 minutes ago, Dave-G said:

It's no secret the extremely wealthy can afford to pay much more than the rest of us.

The 'Rich' pay most of the tax actually;

"The top one per cent pay 30 per cent of all income tax revenues: a higher share than at any time in past twenty years. In other words, three in every ten pounds that the government receives in income tax is paid by just over 300,000 individuals."

Source London School of Economics and Political Science (LSE)

Edited November 14 by JohnfromUK

[Newbie to this]

3 hours ago, JohnfromUK said:

That is because the legislation is full of 'loopholes' and not fit for purpose.  In fact much of the tax legislation os grossly complex and an utter shambles, compiled by an incompetent and shambolic Civil Service and passed by a Parliament who mostly have no 'financial training' and don't really understand the 'small print'.

 

The 'Rich' pay most of the tax actually;

"The top one per cent pay 30 per cent of all income tax revenues: a higher share than at any time in past twenty years. In other words, three in every ten pounds that the government receives in income tax is paid by just over 300,000 individuals."

Source London School of Economics and Political Science (LSE)

Don't let the truth, get in the way of envy.....

[Dave-G]

I forgot to include another part of my thinking.

Labour target typical Tory voters where practical: farmers can't hide that part of their wealth assets off shore like some millionaires can so are ripe for the picking.

[scolopax]

A few points in no particular order.

 

I live in the arable east.  Many smaller family farms have gone, usually bought up by bigger family farms, some of which now own in excess of 4,000 acres and may well lease in as much again. They are not estates, just slickly run farming businesses. The owners are asset rich and cash rich. 

Unless a farmers son / daughter inherits the family farm (I am thinking here of second - third child etc) it is just about impossible for them to get a farm of their own. There are few rented farms coming available and they are often to the highest bidder if they do.

The big old estates are increasingly taking tenanted land back in hand when their farms become available. Thus reducing the number of rented farms available, and therefore the number of farmers. 

a large arable farm was on the market locally to me this year. Not residence but it had farm buildings. Went for £16k an acres, rumour has it that it was a three way bidding war between non farming business men wanting to invest their hard earned.

some farmers have made large fortunes selling land on the periphery of villages and towns for building, and have then reinvested the monies in more farmland somewhere else. I believe this avoids paying tax on the initial sale to developers (?). They remain both asset rich and cash rich.

 

 

 

 

 

 

[JohnfromUK]

2 hours ago, scolopax said:

A few points in no particular order.

 

I live in the arable east.  Many smaller family farms have gone, usually bought up by bigger family farms, some of which now own in excess of 4,000 acres and may well lease in as much again. They are not estates, just slickly run farming businesses. The owners are asset rich and cash rich. 

Unless a farmers son / daughter inherits the family farm (I am thinking here of second - third child etc) it is just about impossible for them to get a farm of their own. There are few rented farms coming available and they are often to the highest bidder if they do.

The big old estates are increasingly taking tenanted land back in hand when their farms become available. Thus reducing the number of rented farms available, and therefore the number of farmers. 

a large arable farm was on the market locally to me this year. Not residence but it had farm buildings. Went for £16k an acres, rumour has it that it was a three way bidding war between non farming business men wanting to invest their hard earned.

some farmers have made large fortunes selling land on the periphery of villages and towns for building, and have then reinvested the monies in more farmland somewhere else. I believe this avoids paying tax on the initial sale to developers (?). They remain both asset rich and cash rich.

 

 

 

 

 

 

What you are saying is that there is BIG money in big estates.  Using the example you have given, 4000 acres and £16K, that would be £64M.  That is not a small farm.

The more important point is that a farm that 'just' slips below the £1M tax threshold (using £16K per acre again) would be around 62 acres - a very small farm.

Where I live, the 'average' farm is around 165 acres.  Taking into account that we also have some big 'business' farms (as opposed to 'family' farms) - the average family farm is less, maybe 150 acres?  That is around £2.5M, so would need to pay tax on £1.5M at 20%, so £300K in tax.  Most farms would not be able to find that money.

I accept your point about farmland being used as a 'tax free asset' by the super rich - but that is because their assets are taxed elsewhere.  On the basis that the money comes (usually) from other business activities (e.g. City earnings, running business, sale of business etc.), the money will have been (or should have been) 'taxed when earned'.

Personally, I accept we have to raise money for State spending (Health, Armed forces, Pensions etc.) and most things are covered by taxes on both earning and spending;

• all of earned income (income tax, NI),
• sale of assets income (CGT), most spending (VAT, Excise duty, Stamp duty,  Development Land Tax, Insurance tax)
• Business activities (Corporation tax, various import duties)
• Travel and transport (Excise duty, Airline passenger tax)

However, I believe some things should be tax free on the basis that the money involved will have been taxed already when earned, and will be taxed again when spent (on most things).  These tax free things (in my view) include savings (possibly only in the UK?) and family spending/giving.

[Agriv8]

I can’t understand why farmers can’t put there farms into a ‘trust’ is this against the rules ?

My parents house is in trust between me and my siblings 

Agriv8

[JohnfromUK]

1 hour ago, Agriv8 said:

I can’t understand why farmers can’t put there farms into a ‘trust’ is this against the rules ?

My parents house is in trust between me and my siblings 

Agriv8

It will all depend on the circumstances and trusts can have very complex rules.  Basically "Lifetime gifts of existing assets into trust, other than gifts of cash or the assignment of investment bonds, will be disposals for CGT"

That means that putting assets into a trust will be a chargeable event if the asset is subject to Capital Gains Tax (CGT) payable by the settlor.  Gains will be assessed to the Settlor (i.e. the person putting the asset into trust) according to their CGT liabilities.  It is possible to 'holdover' this CGT liability in some circumstances.

If the Settlor puts his dwelling house into a trust, the 'main and only' dwelling house is not subject to CGT, so this can be tax free.  Other assets are not tax free.  It can be worth paying the CGT as the CGT rate (24% I think) is less than the Inheritance Tax (IHT) rate (40%, but 20% on farmland), but the CGT may have to be paid on creating a trust.  Note that the IHT on farmland is not 40%, but 20% - so is (currently) lower than CGT.

It is a very complex area - and main dwellings (i.e. one home) and farmland are subject to different rules.

Edited November 15 by JohnfromUK

[Agriv8]

Thanks John for taking the time to type that up . I now understand!

regards Agriv8

1 hour ago, JohnfromUK said:

It will all depend on the circumstances and trusts can have very complex rules.  Basically "Lifetime gifts of existing assets into trust, other than gifts of cash or the assignment of investment bonds, will be disposals for CGT"

That means that putting assets into a trust will be a chargeable event if the asset is subject to Capital Gains Tax (CGT) payable by the .  gains will be assessed to the Settlor (i.e. the person putting the asset into trust) according to their CGT liabilities.  It is possible to 'holdover' this CGT liability in some circumstances.

If the Settlor pus his dwelling house into a trust, the 'main and only' dwelling house is not subject to CGT, so this can be tax free.  Other assets are not tax free.  It can be worth paying the CGT as the CGT rate (24% I think) is less than the Inheritance Tax (IHT) rate (40%, but 20% on farmland), but the CGT may have to be paid on creating a trust.  Note that the IHT on farmland is not 40%, but 20% - so is (currently) lower than CGT.

It is a very complex area - and main dwellings (i.e. one home) and farmland are subject to different rules.

 

Edited November 15 by Agriv8

[JohnfromUK]

2 minutes ago, Agriv8 said:

Thanks John for taking the time to type that up . I know understand!

regards Agriv8

 

You are welcome.  It is a very complex area and to anyone thinking of using trusts or other measures to reduce IHT and CGT, make sure you have good advice and fully understand all of the implications.  It is very hard, almost impossible to plan when legislation changes so often.

Tax reduction measures that suit the VERY rich are not necessarily appropriate to the average person with modest savings and a small tax liability.

What is very 'unfair' about the whole 'capital and savings taxes section' of the tax system is that those who have little savings - either through having little money overall, or spending as fast as they earn won't have capital tax liabilities.

Those who are VERY rich have a number of means by which they can reduce (in some cases dramatically) the tax liability.

But the unfortunate 'careful with money and comfortably off' with a few savings, a pension fund, or a small business/family farm, or perhaps a nice family house and some nice antiques - which they would like to 'keep in the family' and pass to their descendants are going to get really hammered.

Labour has spotted peoples savings, pensions, small businesses and is planning to raid and effectively steal them - and give them away to buy votes.