Farmers and inheritance tax
Discussion
I wanted to discuss the inheritance tax on farmers as its something that I didn't really know much about before and probably don't now.
So farmers didn't have to pay inheritance tax before the budget but they will now.
The main complaint seems to be that
a) farms often run through generations and that is how farms basically survive as you do it for the love/your existing experience
b) just because you have land worth £3million - doesn't mean you are generating large sum of cash/profit
and this will lead to
c) farmers who cannot afford to pay the inheritance tax will sell the land and we will have less farms
I think generally we all agree we want to retain British farms and perhaps they should be given some slack to ensure that (which is what they had)
One of the counter points to this is that rich people are buying up land to avoid paying inheritance tax.
My queries are
1) when would the inheritance tax be paid? Is it a case of if the receiver cannot pay the estate is sold by the Government to get the money back?
2) can we not have a system whereby you are exempt if
- you receive the farm from family or an employer / or similar
- the farm has been legit been used as a farm for say at least a year (and has proof of it)
- the farm has to carry on being used as a farm for x years until it can be sold without inheritance tax being paid
That would potentially weed out the piss takers.
So farmers didn't have to pay inheritance tax before the budget but they will now.
The main complaint seems to be that
a) farms often run through generations and that is how farms basically survive as you do it for the love/your existing experience
b) just because you have land worth £3million - doesn't mean you are generating large sum of cash/profit
and this will lead to
c) farmers who cannot afford to pay the inheritance tax will sell the land and we will have less farms
I think generally we all agree we want to retain British farms and perhaps they should be given some slack to ensure that (which is what they had)
One of the counter points to this is that rich people are buying up land to avoid paying inheritance tax.
My queries are
1) when would the inheritance tax be paid? Is it a case of if the receiver cannot pay the estate is sold by the Government to get the money back?
2) can we not have a system whereby you are exempt if
- you receive the farm from family or an employer / or similar
- the farm has been legit been used as a farm for say at least a year (and has proof of it)
- the farm has to carry on being used as a farm for x years until it can be sold without inheritance tax being paid
That would potentially weed out the piss takers.
I agree with what you're saying. Someone said something similar on LBC earlier - govt values the property; as long as it's continuing to be used as a farm (definitions left to the experts) then treat things as they currently are.
As an aside, is it possible to sell the farm to a limited company (the farmer and family being directors) and run it as such? Surely, that's easier?
As an aside, is it possible to sell the farm to a limited company (the farmer and family being directors) and run it as such? Surely, that's easier?
1) the government has already stated that inheriting farmers would have 10 years to spread the cost of their IHT bill.
2) The farmland being bought up and used as a vehicle to avoid IHT are already being passed down to the owners children in many cases. That's kind of the point. These farms are also still being worked either by employees or tenant farmers. Perhaps there could be some stipulation that the owners must work as farmers themselves? But that gets messy quickly. Define a farmer, and how often that work must be undertaken to qualify. How do you prove either way?
I'm not unsympathetic. We have farming friends who are affected. The farm value metric is a very coarse measure of wealth, because a farm may not be profitable enough to pay the IHT. Farms in the south are disproportionately affected too. It feels like a lazy policy. But it will also absolutely hit the intended targets of the proposals.
2) The farmland being bought up and used as a vehicle to avoid IHT are already being passed down to the owners children in many cases. That's kind of the point. These farms are also still being worked either by employees or tenant farmers. Perhaps there could be some stipulation that the owners must work as farmers themselves? But that gets messy quickly. Define a farmer, and how often that work must be undertaken to qualify. How do you prove either way?
I'm not unsympathetic. We have farming friends who are affected. The farm value metric is a very coarse measure of wealth, because a farm may not be profitable enough to pay the IHT. Farms in the south are disproportionately affected too. It feels like a lazy policy. But it will also absolutely hit the intended targets of the proposals.
The thing about farming is outside of the large enterprises (including the famous Clarkeson and harry) they are effectively vocations.
They have huge spin off jobs to rural communities and obviously of national importance.
These smaller farms do earn money but relative to asset value it’s tiny. Favourable inheritance tax ensures that these assets do not need to broken down to even smaller uneconomical ventures.
This tax break shouldn’t be viewed with the lens that we will gather £x in tax over 5 years it should be what will family look like in 20 years if we do this.
They have huge spin off jobs to rural communities and obviously of national importance.
These smaller farms do earn money but relative to asset value it’s tiny. Favourable inheritance tax ensures that these assets do not need to broken down to even smaller uneconomical ventures.
This tax break shouldn’t be viewed with the lens that we will gather £x in tax over 5 years it should be what will family look like in 20 years if we do this.
I do have sympathy but everything I own I’ve earned from taxed income and I didn’t receive a penny or inheritance from my family, yet anything left above the tax free limit will get taxed when I die. It does feel unfair that my daughter will effectively bear the tax whilst children of farmers wouldn’t (under the old rules).
Perhaps they could have changed the exemption into a form of roll over relief such that the IHT was deferred and only due if the farm was sold. That would have to come with restrictions such that it only applied to active farmers ie children would have to run the farms themselves as a full time occupation to get the relief.
Perhaps they could have changed the exemption into a form of roll over relief such that the IHT was deferred and only due if the farm was sold. That would have to come with restrictions such that it only applied to active farmers ie children would have to run the farms themselves as a full time occupation to get the relief.
It's a method of levelling down, which is what this government wants to do.
Reduces the amount people own and reduce the money they have and passes it to the government who apparently need it more.
Its all part of the plan to reduce everyone to lower levels and reduce mobility and to take back control over people's lives.
Large organisations who have the government ear will benefit from this.
You will own nothing and be happy.
Reduces the amount people own and reduce the money they have and passes it to the government who apparently need it more.
Its all part of the plan to reduce everyone to lower levels and reduce mobility and to take back control over people's lives.
Large organisations who have the government ear will benefit from this.
You will own nothing and be happy.
Getragdogleg said:
It's a method of levelling down, which is what this government wants to do.
Reduces the amount people own and reduce the money they have and passes it to the government who apparently need it more.
Its all part of the plan to reduce everyone to lower levels and reduce mobility and to take back control over people's lives.
Large organisations who have the government ear will benefit from this.
You will own nothing and be happy.
I’m beginning to wonder if this is true,there aren’t many positives these days to convince me otherwise.Reduces the amount people own and reduce the money they have and passes it to the government who apparently need it more.
Its all part of the plan to reduce everyone to lower levels and reduce mobility and to take back control over people's lives.
Large organisations who have the government ear will benefit from this.
You will own nothing and be happy.
I read a few articles yesterday and what I took from it:
The farmers scheme to reduce IHT was only introduced in 1984, since then the value per acre related to produce, whether it’s grain, milk of what ever has multiplied gigantically.
Basically people have bought the land not to use, but to as an investment which has driven out new working farmers from the market.
It’s harsh but I suspect it’s a tool to correct the value of farmland over time.
Although I don’t think anyone should be paying IHT on anything under £1M, as at that level the inheritance will already have been taxed to death on the input side.
Leithen said:
Hoofy said:
As an aside, is it possible to sell the farm to a limited company (the farmer and family being directors) and run it as such? Surely, that's easier?
BPR has been reduced to 50% too. The answer I got from Google is Business Process Reengineering .
Mojooo said:
1) when would the inheritance tax be paid? Is it a case of if the receiver cannot pay the estate is sold by the Government to get the money back?
There will be ten years in which to pay it. Problem is, most small farms wouldn’t even create enough cash in a decade to pay it, never mind instantly.A small farm could have £1m invested in machinery, £1m in barns and a house, then land at £8-10k per acre - you’re easily into many millions but the profit margin is sod all.
Worth a watch :
Harry Metcalfe
https://www.youtube.com/watch?v=QBbrrusx3Io
Nigel Farage (yes really)
https://www.youtube.com/watch?v=Ghu-BPKFOXs
It's interesting to read the opinion of Dan Neodle on this -https://www.linkedin.com/posts/danneidle_ive-been-hearing-today-from-farmers-who-activity-7257776704520159232-5BmI
He seems to think that very few farmers are likely to be significantly affected (if trusts are used, the costs could be between 3 and 6% of the value).
Clarkson has previously admitted to buying the farm partly as a tax minimisation method and that a only farms a small percentage of the total site.
Similar to the Reform MP who describes himself as a farmer, when he's really just someone who bought a farm to keep horses on...
He seems to think that very few farmers are likely to be significantly affected (if trusts are used, the costs could be between 3 and 6% of the value).
Clarkson has previously admitted to buying the farm partly as a tax minimisation method and that a only farms a small percentage of the total site.
Similar to the Reform MP who describes himself as a farmer, when he's really just someone who bought a farm to keep horses on...
Getragdogleg said:
It's a method of levelling down, which is what this government wants to do.
Reduces the amount people own and reduce the money they have and passes it to the government who apparently need it more.
Its all part of the plan to reduce everyone to lower levels and reduce mobility and to take back control over people's lives.
Large organisations who have the government ear will benefit from this.
You will own nothing and be happy.
I’m beginning to wonder if this is true,there aren’t many positives these days to convince me otherwise.Reduces the amount people own and reduce the money they have and passes it to the government who apparently need it more.
Its all part of the plan to reduce everyone to lower levels and reduce mobility and to take back control over people's lives.
Large organisations who have the government ear will benefit from this.
You will own nothing and be happy.
smifffymoto said:
Getragdogleg said:
It's a method of levelling down, which is what this government wants to do.
Reduces the amount people own and reduce the money they have and passes it to the government who apparently need it more.
Its all part of the plan to reduce everyone to lower levels and reduce mobility and to take back control over people's lives.
Large organisations who have the government ear will benefit from this.
You will own nothing and be happy.
I’m beginning to wonder if this is true,there aren’t many positives these days to convince me otherwise.Reduces the amount people own and reduce the money they have and passes it to the government who apparently need it more.
Its all part of the plan to reduce everyone to lower levels and reduce mobility and to take back control over people's lives.
Large organisations who have the government ear will benefit from this.
You will own nothing and be happy.
rscott said:
It's interesting to read the opinion of Dan Neodle on this -https://www.linkedin.com/posts/danneidle_ive-been-hearing-today-from-farmers-who-activity-7257776704520159232-5BmI
He seems to think that very few farmers are likely to be significantly affected (if trusts are used, the costs could be between 3 and 6% of the value).
Clarkson has previously admitted to buying the farm partly as a tax minimisation method and that a only farms a small percentage of the total site.
Similar to the Reform MP who describes himself as a farmer, when he's really just someone who bought a farm to keep horses on...
If there was a forewarning that IHT would be chargeable then you could plan and mitigate any taxes eg 7 year IHT, consulting advisors on CGT etc.He seems to think that very few farmers are likely to be significantly affected (if trusts are used, the costs could be between 3 and 6% of the value).
Clarkson has previously admitted to buying the farm partly as a tax minimisation method and that a only farms a small percentage of the total site.
Similar to the Reform MP who describes himself as a farmer, when he's really just someone who bought a farm to keep horses on...
Stick a clueless ‘economist’ into number eleventy, allow her to make some very odd decisions and you end up with farmers hanging themselves to get their estates passed on before the rules come into effect.
https://www.lbc.co.uk/news/farmer-took-his-own-lif...
Someone on here summed it up brilliantly - labour have not thought about any second or third order effects of any of their new policies. They’re f
king clueless.I believe Clarkson was one of the targets for this, he bought a farm which was then let out (possibly let out when he bought it). The lessee retired and Clarkson stepped in so wasn’t intending to farm.
I an being told That tax will have to be paid twice on a pension I have suffered to build up if I die before I spend it.
The real issue isn’t the farms, it is Labour whose policies aim at no-one having anything of their own and we are all dependent on the state for handouts. Like Brown having higher rate taxpayers on benefits.
I an being told That tax will have to be paid twice on a pension I have suffered to build up if I die before I spend it.
The real issue isn’t the farms, it is Labour whose policies aim at no-one having anything of their own and we are all dependent on the state for handouts. Like Brown having higher rate taxpayers on benefits.
andy43 said:
rscott said:
It's interesting to read the opinion of Dan Neodle on this -https://www.linkedin.com/posts/danneidle_ive-been-hearing-today-from-farmers-who-activity-7257776704520159232-5BmI
He seems to think that very few farmers are likely to be significantly affected (if trusts are used, the costs could be between 3 and 6% of the value).
Clarkson has previously admitted to buying the farm partly as a tax minimisation method and that a only farms a small percentage of the total site.
Similar to the Reform MP who describes himself as a farmer, when he's really just someone who bought a farm to keep horses on...
If there was a forewarning that IHT would be chargeable then you could plan and mitigate any taxes eg 7 year IHT, consulting advisors on CGT etc.He seems to think that very few farmers are likely to be significantly affected (if trusts are used, the costs could be between 3 and 6% of the value).
Clarkson has previously admitted to buying the farm partly as a tax minimisation method and that a only farms a small percentage of the total site.
Similar to the Reform MP who describes himself as a farmer, when he's really just someone who bought a farm to keep horses on...
Stick a clueless ‘economist’ into number eleventy, allow her to make some very odd decisions and you end up with farmers hanging themselves to get their estates passed on before the rules come into effect.
https://www.lbc.co.uk/news/farmer-took-his-own-lif...
Someone on here summed it up brilliantly - labour have not thought about any second or third order effects of any of their new policies. They’re f
king clueless.Most of the farmers around me have been using trusts for decades to protect their farms. This tax change will encourage more to do the same.
One side effect of the change may be to reduce the value of agricultural land, which may not be a bad thing for many farmers.
sparkythecat said:
Leithen said:
Hoofy said:
As an aside, is it possible to sell the farm to a limited company (the farmer and family being directors) and run it as such? Surely, that's easier?
BPR has been reduced to 50% too. The answer I got from Google is Business Process Reengineering .
https://kpmg.com/uk/en/home/insights/2024/11/tmd-b...
https://www.gov.uk/business-relief-inheritance-tax
rscott said:
The farmer who hanged himself the day before the budget, when no-one knew what the details would be? It's incredibly sad he took his own life, but it's not even clear if his farm would have been affected by the changes.
Most of the farmers around me have been using trusts for decades to protect their farms. This tax change will encourage more to do the same.
One side effect of the change may be to reduce the value of agricultural land, which may not be a bad thing for many farmers.
Possibly, but I wouldn't hold your breath.Most of the farmers around me have been using trusts for decades to protect their farms. This tax change will encourage more to do the same.
One side effect of the change may be to reduce the value of agricultural land, which may not be a bad thing for many farmers.
Land, as they say, isn't being made any more. Whilst the tax advantages and previous value gains maybe gone, if you have a large amount of money to invest, park, shelter, etc, land will still be attractive. Especially if planning is derestricted in the future.
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