Fundamentally, as one of my friends I travelled down with said, on paper their farm is worth £3m. But only if they sell it. Meanwhile the margins are such that last year they struggled to buy new school shoes for their 9yo daughter.
If I was sitting on £3m and struggling for day to day costs you wouldn't see me for dust as I headed to the Estate Agents.
Fundamentally, as one of my friends I travelled down with said, on paper their farm is worth £3m. But only if they sell it. Meanwhile the margins are such that last year they struggled to buy new school shoes for their 9yo daughter.
If I was sitting on £3m and struggling for day to day costs you wouldn't see me for dust as I headed to the Estate Agents.
Which is why you’re not a farmer. Most of them have to be born to it because in reality (never mind on paper) it’s a pretty ludicrous proposition as a way to spend your life.
Yeah but let's not pretend that there are absolutely no benefits in having that amount in assets.
Yeah but (it’s always ‘yeah but’ isn’t it), the cash still isn’t there.
It demonstrably is, it can be borrowed against among other things, or small amounts sold off.
Also, your quoted margin of 1% is only true for people are acquiring more land to form at current prices, it shouldn't be a factor for the family farm that already inherited their current set up.
Fundamentally, as one of my friends I travelled down with said, on paper their farm is worth £3m. But only if they sell it. Meanwhile the margins are such that last year they struggled to buy new school shoes for their 9yo daughter.
If I was sitting on £3m and struggling for day to day costs you wouldn't see me for dust as I headed to the Estate Agents.
Fundamentally, as one of my friends I travelled down with said, on paper their farm is worth £3m. But only if they sell it. Meanwhile the margins are such that last year they struggled to buy new school shoes for their 9yo daughter.
If I was sitting on £3m and struggling for day to day costs you wouldn't see me for dust as I headed to the Estate Agents.
Which is why you’re not a farmer. Most of them have to be born to it because in reality (never mind on paper) it’s a pretty ludicrous proposition as a way to spend your life.
Yeah but let's not pretend that there are absolutely no benefits in having that amount in assets.
Yeah but (it’s always ‘yeah but’ isn’t it), the cash still isn’t there.
It demonstrably is, it can be borrowed against among other things, or small amounts sold off.
Also, your quoted margin of 1% is only true for people are acquiring more land to form at current prices, it shouldn't be a factor for the family farm that already inherited their current set up.
If someone inherits money over the IHT threshold they give some of it to the tax man. If they inherit a stately home they can sell a Stubbs.
A family farm of say £1.5-3m value, huge overdraft and tiny margins is being offered an exciting choice of increase the debt or reduce the size. Either way hitting the already woeful margins.
As an aside, I used to work in marketing communications and wore a PR hat in a number of institutions. What @North East Quine cites is an extreme example of what happens all the time.
I'm going to get into trouble for saying this @Telford but your apparent naivety puzzles me at times. Given the nature of your career you'll have seen and heard things that would make our hair curl. Dealt with all sorts of wrong uns.
Yet when it comes to the press and media you seem to be willing to give them the benefit of the doubt when it comes to sensationalism and spin.
I hope not. I never like to see anyone in trouble just for posting
@Telford but your apparent naivety puzzles me at times. Given the nature of your career you'll have seen and heard things that would make our hair curl. Dealt with all sorts of wrong uns.
Yet when it comes to the press and media you seem to be willing to give them the benefit of the doubt when it comes to sensationalism and spin.
My experience helped me to recognise wrong uns and this government is full of them.
They keep telling us that very few farmers will need to pay this tax to fill the mysterious £22 billion black hole. so why were about 10,000 protesting in Whitehall today?
I hope not. I never like to see anyone in trouble just for posting
@Telford but your apparent naivety puzzles me at times. Given the nature of your career you'll have seen and heard things that would make our hair curl. Dealt with all sorts of wrong uns.
Yet when it comes to the press and media you seem to be willing to give them the benefit of the doubt when it comes to sensationalism and spin.
My experience helped me to recognise wrong uns and this government is full of them.
They keep telling us that very few farmers will need to pay this tax to fill the mysterious £22 billion black hole. so why were about 10,000 protesting in Whitehall today?
Because your pals at GB News have been lying to them about it.
I hope not. I never like to see anyone in trouble just for posting
@Telford but your apparent naivety puzzles me at times. Given the nature of your career you'll have seen and heard things that would make our hair curl. Dealt with all sorts of wrong uns.
Yet when it comes to the press and media you seem to be willing to give them the benefit of the doubt when it comes to sensationalism and spin.
My experience helped me to recognise wrong uns and this government is full of them.
They keep telling us that very few farmers will need to pay this tax to fill the mysterious £22 billion black hole. so why were about 10,000 protesting in Whitehall today?
Because your pals at GB News have been lying to them about it.
I imagine GB News didn't question why they were there and blocking traffic rather than working, nor suggest they should maybe give up Netflix and avocados.
Also, no protest is ever about one thing. So, a lot of farmers would have been there to take the opportunity to protest about a lot of things even though they personally wouldn't be affected by the change to inheritance tax. Farmers work hard for very little income, they have legitimate complaints about what supermarkets are willing to pay them (often less than cost of production), they're as impacted by fuel price rises and other rising costs as any other business, they face pressures from developers wanting to buy their land for more profitable ventures such as housing or filling with shipping containers of batteries, etc.
Also, no protest is ever about one thing. So, a lot of farmers would have been there to take the opportunity to protest about a lot of things even though they personally wouldn't be affected by the change to inheritance tax. Farmers work hard for very little income, they have legitimate complaints about what supermarkets are willing to pay them (often less than cost of production), they're as impacted by fuel price rises and other rising costs as any other business, they face pressures from developers wanting to buy their land for more profitable ventures such as housing or filling with shipping containers of batteries, etc.
And yet the thing that actually triggers a protest is a tax hardly any will pay except the super rich.
I hope not. I never like to see anyone in trouble just for posting
@Telford but your apparent naivety puzzles me at times. Given the nature of your career you'll have seen and heard things that would make our hair curl. Dealt with all sorts of wrong uns.
Yet when it comes to the press and media you seem to be willing to give them the benefit of the doubt when it comes to sensationalism and spin.
My experience helped me to recognise wrong uns and this government is full of them.
They keep telling us that very few farmers will need to pay this tax to fill the mysterious £22 billion black hole. so why were about 10,000 protesting in Whitehall today?
Because your pals at GB News have been lying to them about it.
Also, no protest is ever about one thing. So, a lot of farmers would have been there to take the opportunity to protest about a lot of things even though they personally wouldn't be affected by the change to inheritance tax. Farmers work hard for very little income, they have legitimate complaints about what supermarkets are willing to pay them (often less than cost of production), they're as impacted by fuel price rises and other rising costs as any other business, they face pressures from developers wanting to buy their land for more profitable ventures such as housing or filling with shipping containers of batteries, etc.
And yet the thing that actually triggers a protest is a tax hardly any will pay except the super rich.
I take it you believe the left wing propoganda. You need to wise up.
The biggest owner of farmland in the UK won't pay any tax because it is the National Trust. However, their tenant farmers will be badly hit because they'll get clobbered for the value of their machinery and of their livestock, and with no house to mortgage to raise money to pay IHT what are they meant to do?
And once you lose small farmers who actually live and work on land they either own or their families have rented for generations, you'll lose other things - for example, most snow-clearing and gritting of roads in rural areas is done by local farmers, and they also help the ambulance services in remote areas where NHS vehicles can't access people who've come to grief.
@Arethosemyfeet The "super rich" won't pay IHT because their land holdings are held in a Trust.
I'll expose myself to fire from both sides on this one, but it is noticeable that those who live in rural areas, such as @betjemaniac and, I think @TheOrganist (?) do see potential harm for small farmers in this, and that it isn't only going to affect the likes of Clarkson and wealthier farmers.
Things might be very different for crofters, as @Arethosemyfeet has indicated.
Time will tell. I think it's certainly the case that those farmers that are protesting will be doing so for a range and variety of reasons and not only this particular issue.
Tenant farmers round here aren't rolling in money. Others are asset rich but cash poor. Others are certainly loaded. We can't generalise about an entire industry. So many different factors. My guess would be that some farmers have legitimate concerns and that others will find they have little or nothing to worry about.
That said, I think it is highly dismissive to make out that farmers are so gullible that the only reason they'd take their tractors to Westminster or to the Welsh Labour conference in Llandudno is because GB News is encouraging them to do so. Not that I have any truck with GB News. If it only had one viewer that would be one too many ... 😉
Meanwhile, I take it that @chrisstiles ascetically eschews both Netflix and avocados and subsists entirely on bread and potatoes as an act of solidarity with workers subject to the vicissitudes of global capitalism.
And that @Telford's ability to sniff out a wrong un doesn't extend to the wrong uns behind GB News or Reform or the Tory party.
And no, I don't intend taking either of them to Hell. I'm simply suggesting that things aren't as simple and clear cut as some of their posts appear to make out.
The biggest owner of farmland in the UK won't pay any tax because it is the National Trust. However, their tenant farmers will be badly hit because they'll get clobbered for the value of their machinery and of their livestock, and with no house to mortgage to raise money to pay IHT what are they meant to do?
Precisely how many tenant farmers do you think have assets over £1M? Machinery depreciates over time and, if farms are as cash poor as is claimed, will be financed. I find it very hard to believe that the size of tenant farming operation with that level of assets wouldn't have a large enough turnover to cover what would still be a small tax bill over 10 years.
Besides, an avocado costs around 80p or a quid in Aldi or Asda. You can't get a packet of crisps for that in a corner shop or motorway service station.
I've no idea how much a Netflix subscription costs as I don't have one. That's not a hair-shirt comment. I probably spend whatever the equivalent of a subscription to Netflix is on subscriptions to poetry magazines and so on. That doesn't make me any more virtuous. I'm simply choosing to spend my money in a different way.
Why is it any more acceptable to begrudge farmers avocados or Netflix than somebody else a fortnight in Blackpool or a weekly takeaway (daily in some instances) or a few pints of fizzy piss or whatever else people choose to spend money on or spend their time doing?
I mean, I've even heard it rumoured that some people like to watch GB News in their spare time. There's no accounting for taste ... 😉
Are we asking people who aren't farmers but who might struggle to make ends meet to give up their Netflix subscription or whatever else?
There is certainly food and budgetary inequality here in the UK. I remember some studies which showed that people in Easterhouse were having to spend more on food each week then the bright young things and media types in Glasgow's fashionable West End. Their only options were pricey corner shops or to take taxis to supermarkets out of their immediate area. In the West End people were spoiled for choice.
There are certainly serious matters to discuss around the inheritance tax thing and whether it will have the impact some fear and others deny.
But to engage in Puritanical jibes about avocados and Netflix seems to me to be missing the point. It only reinforces stereotypes about a Puritanical left. Those who are leftward leaning ought to be able to do better than that.
Blimey! I've just looked up the price of a Netflix subscription. It appears to be around £4.99 per head a month or £10.99 standard version or £17.99 for all the features, bells and whistles.
I know people who can ill afford to do so who spend more than that on a night out once a week.
Farmers are often isolated. I know people who grew up on farms who tell me the only time their parents saw anyone other than farm workers during the week was at church on a Sunday morning. They weren't particularly religious but church was their only opportunity to see anyone who wasn't connected with their farm.
I'm not going to begrudge them a Netflix subscription or an avocado at 80p from an Aldi 5 miles away.
In the interests of balance, though, our parish priest had a dig at the farmers during his sermon on Sunday for begrudging paying tax on million pound estates.
The biggest owner of farmland in the UK won't pay any tax because it is the National Trust. However, their tenant farmers will be badly hit because they'll get clobbered for the value of their machinery and of their livestock, and with no house to mortgage to raise money to pay IHT what are they meant to do?
I believe the NT (and NTS) own the largest number of farms (about 1500 tenant farmers between the two organisations), but these are all small farms. The remit of NT/NTS is to protect rural environments for the nation, and small holdings and low intensity agriculture are a vital part of that work. Thus, those tenant farmers are going to own much less machinery compared to large arable farms with multiple combine harvesters and other very expensive kit, though it may be that those tenant farmers are maintaining flocks and herds of rare breeds with animals worth more than the average sheep or cow. Still very unlikely any of those farmers own more than £1m worth of machinery or stock.
In terms of acreage of land ownership, NT/NTS aren't at the top of the list. That list is topped by the Forestry Commission, much of it growing crops of trees, by a long way. The Ministry of Defence owns more land than NT/NTS, where potential for farming is significantly reduced by other uses (though, a lot of that land is important for wildlife, havens for the much reduced biodiversity of the UK). The Crown owns a large proportion of our countryside. Other charities own a lot of land, RSPB being the largest of those.
The cumulative total of farmland owned by aristocrats is about a third of the total, about 17% is owned by various tycoons - about 12% of farmland in the UK is owned by just 50 people.
About 5% of UKs farmland is owned by the farmers who actually work the land.
I wonder how much is still owned by Oxbridge Colleges? It used to be claimed that you could walk from St John's, Oxford, to St John', Cambridge, without ever leaving land owned by one or the other. I have no idea how true that is, but there's certainly a lot of land around here still in college hands. Mind, you'd expect that.
But to engage in Puritanical jibes about avocados and Netflix seems to me to be missing the point. It only reinforces stereotypes about a Puritanical left. Those who are leftward leaning ought to be able to do better than that.
It's mocking the right who use avocados (traditionally avocado toast) and Netflix subscriptions to dismiss any complaints from young people about the impossibility of ever buying a home. The right wing media suddenly stop being about personal responsibility and being frugal when it comes to their rich mates.
Ok. But seeing as I don't read the right-wing press - such as the Mail and the Telegraph - the allusion passed me by. I confess to looking at The Times to get a feel for what's being said outside of Grauniad-dom and the BBC. I also look at The New Statesman from time to time but must confess that I'm not great at following newsmedia of any kind online.
I don't do 'X' or Twitter as it was and am pretty 'old school' by and large.
But yes, I can see the thing about double-standards, but that isn't the sole preserve of the political right. There are liberal double-standards. There are left-wing double-standards.
I wonder how much is still owned by Oxbridge Colleges?
When I was an undergraduate at Oxford one of my tutors was Estates Bursar for the college, and he told us that the college then owned about a third of Lincolnshire. Things may have changed over the past 50+ years.
In the interests of balance, though, our parish priest had a dig at the farmers during his sermon on Sunday for begrudging paying tax on million pound estates.
The biggest owner of farmland in the UK won't pay any tax because it is the National Trust. However, their tenant farmers will be badly hit because they'll get clobbered for the value of their machinery and of their livestock, and with no house to mortgage to raise money to pay IHT what are they meant to do?
Precisely how many tenant farmers do you think have assets over £1M? Machinery depreciates over time and, if farms are as cash poor as is claimed, will be financed. I find it very hard to believe that the size of tenant farming operation with that level of assets wouldn't have a large enough turnover to cover what would still be a small tax bill over 10 years.
Of course assets will depreciate, and the price of livestock is going to fluctuate, as is the price of feed, etc. A reasonable standard dairy cow today will cost £1,800-£2,000 at market and the average UK dairy herd size is around 210 animals. Of course some animals will be replaced by home-bred heifers, and the cost of them from birth to production is around £4,500. As with any business, when a farming estate is valued the assets include stocks of feed, fertilisers, frozen semen, etc.
When it comes to farm buildings, you can bet that anything built of brick or stone will be assessed by HMRC using values for development, rather than as working byres or milking sheds, and that is going to push assessments up. Similarly if a farm has a cottage for a cowman that too will be included in the assessment as if it were a second home, not as a working asset.
The other elephant in the room is how farmers are meant to raise the money to pay a tax liability - yes, we've all heard the "they'll be able to pay it over 10 years" but with average farm incomes so low, how are they meant to pay the instalments?
There is a fundamental ignorance in Whitehall about the economics of farming. A rate of return on investment (profit) for farmers of 1% is considered good, and that is higher than most manage.
The biggest owner of farmland in the UK won't pay any tax because it is the National Trust. However, their tenant farmers will be badly hit because they'll get clobbered for the value of their machinery and of their livestock, and with no house to mortgage to raise money to pay IHT what are they meant to do?
Precisely how many tenant farmers do you think have assets over £1M? Machinery depreciates over time and, if farms are as cash poor as is claimed, will be financed. I find it very hard to believe that the size of tenant farming operation with that level of assets wouldn't have a large enough turnover to cover what would still be a small tax bill over 10 years.
Of course assets will depreciate, and the price of livestock is going to fluctuate, as is the price of feed, etc. A reasonable standard dairy cow today will cost £1,800-£2,000 at market and the average UK dairy herd size is around 210 animals. Of course some animals will be replaced by home-bred heifers, and the cost of them from birth to production is around £4,500. As with any business, when a farming estate is valued the assets include stocks of feed, fertilisers, frozen semen, etc.
When it comes to farm buildings, you can bet that anything built of brick or stone will be assessed by HMRC using values for development, rather than as working byres or milking sheds, and that is going to push assessments up. Similarly if a farm has a cottage for a cowman that too will be included in the assessment as if it were a second home, not as a working asset.
The other elephant in the room is how farmers are meant to raise the money to pay a tax liability - yes, we've all heard the "they'll be able to pay it over 10 years" but with average farm incomes so low, how are they meant to pay the instalments?
There is a fundamental ignorance in Whitehall about the economics of farming. A rate of return on investment (profit) for farmers of 1% is considered good, and that is higher than most manage.
I can't understand how an experienced economist would make such a mistake
In the interests of balance, though, our parish priest had a dig at the farmers during his sermon on Sunday for begrudging paying tax on million pound estates.
Sounds like a very strange sermon
How so? One might question the partiality of it in a sermon which referenced laying up treasure in heaven rather than accumulating worldly wealth but the allusion did fit the theme.
But he can preach strange sermons, yes.
St John Chrysostom preached sermons which hit out at ostentatious displays of wealth, social injustice etc which got him into trouble with the Empress. Were those 'strange sermons'?
I do think the current issue with the farmers is more complicated though and from what I can gather there is some concern among Labour MPs recently elected to rural/semi-rural areas for the first time.
One of the interesting points about John Prescott, who has just died, is that he made the rightwards shift under Blair palatable. So he had an image as a son of the soil, but helped propel Labour to the centre. I guess Labour have always had such fixers, today Rayner does it. I'm proper working class, but not left wing.
One of the interesting points about John Prescott, who has just died, is that he made the rightwards shift under Blair palatable. So he had an image as a son of the soil, but helped propel Labour to the centre. I guess Labour have always had such fixers, today Rayner does it. I'm proper working class, but not left wing.
Interesting quote from Heseltine that he tracked left over the same time and he and Prescott found themselves usually on the same side of issues in the middle having come from opposite wings.
I was chatting with my wife about Prescott and Rayner, and she said, that's the only way you can get a Labour govt, by using rightwingers prominently. So there we are.
Of course assets will depreciate, and the price of livestock is going to fluctuate, as is the price of feed, etc. A reasonable standard dairy cow today will cost £1,800-£2,000 at market and the average UK dairy herd size is around 210 animals. Of course some animals will be replaced by home-bred heifers, and the cost of them from birth to production is around £4,500. As with any business, when a farming estate is valued the assets include stocks of feed, fertilisers, frozen semen, etc.
It costs £2,000 to purchase an adult cow, or £4,500 to manufacture that cow? How does that work?
When it comes to farm buildings, you can bet that anything built of brick or stone will be assessed by HMRC using values for development, rather than as working byres or milking sheds, and that is going to push assessments up. Similarly if a farm has a cottage for a cowman that too will be included in the assessment as if it were a second home, not as a working asset.
Well, the guidance HMRC use internally are available, and it can be verified that neither of the those things are the case:
There is a fundamental ignorance in Whitehall about the economics of farming. A rate of return on investment (profit) for farmers of 1% is considered good, and that is higher than most manage.
Are you talking about return on investment or profit (actually profit margin) ? Because they are different things. On investment, this is only an issue for those buying farmland at current prices in order to farm it now, in which case yes, investment of that kind is a bad deal currently because of agricultural tax relief.
One of the interesting points about John Prescott, who has just died, is that he made the rightwards shift under Blair palatable. So he had an image as a son of the soil, but helped propel Labour to the centre. I guess Labour have always had such fixers, today Rayner does it. I'm proper working class, but not left wing.
Raynor is proper working class but smirks far too much.
The biggest owner of farmland in the UK won't pay any tax because it is the National Trust. However, their tenant farmers will be badly hit because they'll get clobbered for the value of their machinery and of their livestock, and with no house to mortgage to raise money to pay IHT what are they meant to do?
Precisely how many tenant farmers do you think have assets over £1M? Machinery depreciates over time and, if farms are as cash poor as is claimed, will be financed. I find it very hard to believe that the size of tenant farming operation with that level of assets wouldn't have a large enough turnover to cover what would still be a small tax bill over 10 years.
Of course assets will depreciate, and the price of livestock is going to fluctuate, as is the price of feed, etc. A reasonable standard dairy cow today will cost £1,800-£2,000 at market and the average UK dairy herd size is around 210 animals. Of course some animals will be replaced by home-bred heifers, and the cost of them from birth to production is around £4,500. As with any business, when a farming estate is valued the assets include stocks of feed, fertilisers, frozen semen, etc.
When it comes to farm buildings, you can bet that anything built of brick or stone will be assessed by HMRC using values for development, rather than as working byres or milking sheds, and that is going to push assessments up. Similarly if a farm has a cottage for a cowman that too will be included in the assessment as if it were a second home, not as a working asset.
The other elephant in the room is how farmers are meant to raise the money to pay a tax liability - yes, we've all heard the "they'll be able to pay it over 10 years" but with average farm incomes so low, how are they meant to pay the instalments?
There is a fundamental ignorance in Whitehall about the economics of farming. A rate of return on investment (profit) for farmers of 1% is considered good, and that is higher than most manage.
I can't understand how an experienced economist would make such a mistake
Of course assets will depreciate, and the price of livestock is going to fluctuate, as is the price of feed, etc. A reasonable standard dairy cow today will cost £1,800-£2,000 at market and the average UK dairy herd size is around 210 animals. Of course some animals will be replaced by home-bred heifers, and the cost of them from birth to production is around £4,500. As with any business, when a farming estate is valued the assets include stocks of feed, fertilisers, frozen semen, etc.
It costs £2,000 to purchase an adult cow, or £4,500 to manufacture that cow? How does that work?
Milking herds don't often buy calves, they produce their own. You get back your money from the production of calves (most cows will have at least 3 or 4 in their lifetime, organic herds tend to have a longer lifespan so produce more calves) and milk production, plus the price at slaughter. A Holstein Friesian cow weighs around 600kg and price per kg at slaughter is between 310p and 330p so you'll get around £1800-£2,000 per cow.
The biggest owner of farmland in the UK won't pay any tax because it is the National Trust. However, their tenant farmers will be badly hit because they'll get clobbered for the value of their machinery and of their livestock, and with no house to mortgage to raise money to pay IHT what are they meant to do?
Precisely how many tenant farmers do you think have assets over £1M? Machinery depreciates over time and, if farms are as cash poor as is claimed, will be financed. I find it very hard to believe that the size of tenant farming operation with that level of assets wouldn't have a large enough turnover to cover what would still be a small tax bill over 10 years.
Of course assets will depreciate, and the price of livestock is going to fluctuate, as is the price of feed, etc. A reasonable standard dairy cow today will cost £1,800-£2,000 at market and the average UK dairy herd size is around 210 animals. Of course some animals will be replaced by home-bred heifers, and the cost of them from birth to production is around £4,500. As with any business, when a farming estate is valued the assets include stocks of feed, fertilisers, frozen semen, etc.
When it comes to farm buildings, you can bet that anything built of brick or stone will be assessed by HMRC using values for development, rather than as working byres or milking sheds, and that is going to push assessments up. Similarly if a farm has a cottage for a cowman that too will be included in the assessment as if it were a second home, not as a working asset.
The other elephant in the room is how farmers are meant to raise the money to pay a tax liability - yes, we've all heard the "they'll be able to pay it over 10 years" but with average farm incomes so low, how are they meant to pay the instalments?
There is a fundamental ignorance in Whitehall about the economics of farming. A rate of return on investment (profit) for farmers of 1% is considered good, and that is higher than most manage.
I can't understand how an experienced economist would make such a mistake
Well, is she?
Well her MSc was in economics and she worked as an economist for six years at the Bank of England before moving to a retail banking role at HBOS.
Sorry to go back to farmers, but there are now mutterings that the clownshow that passes for the British government has ordered the Treasury to look at the impact of the IHT changes on farmers.
Having apparently not done so before making the change.
The Guardian claims that they’re going to run the numbers excluding small holders and hobbyists in order to get proper statistics on who is affected, and in what numbers. DEFRA is ‘listening’ and going to No10.
Has anyone got a spare whelk stall they’d like them to try and run?
This is a clownshow? What a usefully short memory you have. Mind you, not having done this before is poor, but the principle is essential. Farmers do not exist in a parallel universe, whatever their fantasies (which some people seem willing to accede to), and if they die leaving significant assets, there is no reason why they should not be subject to IHT.
Agricultural property relief was a political decision to buy the votes of wealthy landowners, taken by Margaret Thatcher. This now needs destroying.
This is a clownshow? What a usefully short memory you have. Mind you, not having done this before is poor, but the principle is essential. Farmers do not exist in a parallel universe, whatever their fantasies (which some people seem willing to accede to), and if they die leaving significant assets, there is no reason why they should not be subject to IHT.
Agricultural property relief was a political decision to buy the votes of wealthy landowners, taken by Margaret Thatcher. This now needs destroying.
Well I hated the last government too. On here.
Having said that you’re right that there are ‘fantasies’ that need ‘destroying’ - we, as I said before the election, can start with those in the minds of anyone stupid enough to vote Labour at the last election thinking they’d represent improvement rather than just a change of faces.
This is a clownshow? What a usefully short memory you have. Mind you, not having done this before is poor, but the principle is essential. Farmers do not exist in a parallel universe, whatever their fantasies (which some people seem willing to accede to), and if they die leaving significant assets, there is no reason why they should not be subject to IHT.
Agricultural property relief was a political decision to buy the votes of wealthy landowners, taken by Margaret Thatcher. This now needs destroying.
Well I hated the last government too. On here.
Having said that you’re right that there are ‘fantasies’ that need ‘destroying’ - we, as I said before the election, can start with those in the minds of anyone stupid enough to vote Labour at the last election thinking they’d represent improvement rather than just a change of faces.
There have been some improvements. Minor, in the scheme of things, but we've at least stopped the ridiculous and expensive charade of trying to render people seeking asylum to Rwanda. And this government appears to at least recognise that money is a requirement for improved public services.
Sorry to go back to farmers, but there are now mutterings that the clownshow that passes for the British government has ordered the Treasury to look at the impact of the IHT changes on farmers.
Having apparently not done so before making the change.
The Guardian claims that they’re going to run the numbers excluding small holders and hobbyists in order to get proper statistics on who is affected, and in what numbers. DEFRA is ‘listening’ and going to No10.
Has anyone got a spare whelk stall they’d like them to try and run?
According to DEFRA rules a bass in my choir is a farmer because he has a pet pig.
The Guardian claims that they’re going to run the numbers excluding small holders and hobbyists in order to get proper statistics on who is affected, and in what numbers. DEFRA is ‘listening’ and going to No10.
As the small holders and hobbyists weren't going to be affected anyway that exercise won't change the number of farmers who would be affected. Though, it would change the proportion of 'farmers' affected if you exclude, or not, people who aren't farmers in any real sense. Which makes the revision look very much like an exercise in making things look better than they are. Sometimes the stats of "this will affect 5% of people" mislead, if that's 5% of a large number that's still a lot of people impacted.
The number of farms that are passed on to younger family members per year must be reasonably easy to determine (for a start, each of those would have applied for APR in recent years), though that number may be inflated if it includes a lot of small holdings that are not farming businesses, but owned as a hobby or other uses. What may be harder to find if the value of property isn't included in the APR application paperwork is how many of those would have exceeded the new £1.5m/£3m thresholds, and even harder if land values fall if there's less demand for people looking for tax havens. I'm still hearing the number of around 500 farms per year being subject to inheritance tax, though I'm equally unclear if there's any basis for that number (much less a transparent explanation for how it was determined). There are a bit over 200,000 farms in the UK (source: DEFRA, average 82ha almost half <20ha), not all will be family owned but if I do some back of the envelope estimations ... assume a farm generation of 30y, so a farm get inherited on average once every 30 years, and 150,000 family farms then that's 5,000 farms per year being passed on from one generation of a family to the next, and if that 500 farms per year number is correct then that's 10% of farms affected. But that percentage is pretty meaningless to each of those 500 families who may be finding it unaffordable to inherit the family farm, or at least facing additional costs in doing so.
I am fairly sure his pet pig won’t be worth 3 million pounds though.
Which is sort of the point. That’s fairly ludicrous, but as the Guardian points out, there are people with a paddock claiming APR who therefore are currently in the figures as ‘farmers’ - and more to the point ‘farmers who won’t be affected by the changes’
The Guardian claims that they’re going to run the numbers excluding small holders and hobbyists in order to get proper statistics on who is affected, and in what numbers. DEFRA is ‘listening’ and going to No10.
As the small holders and hobbyists weren't going to be affected anyway that exercise won't change the number of farmers who would be affected. Though, it would change the proportion of 'farmers' affected if you exclude, or not, people who aren't farmers in any real sense. Which makes the revision look very much like an exercise in making things look better than they are. Sometimes the stats of "this will affect 5% of people" mislead, if that's 5% of a large number that's still a lot of people impacted.
The number of farms that are passed on to younger family members per year must be reasonably easy to determine (for a start, each of those would have applied for APR in recent years), though that number may be inflated if it includes a lot of small holdings that are not farming businesses, but owned as a hobby or other uses. What may be harder to find if the value of property isn't included in the APR application paperwork is how many of those would have exceeded the new £1.5m/£3m thresholds, and even harder if land values fall if there's less demand for people looking for tax havens. I'm still hearing the number of around 500 farms per year being subject to inheritance tax, though I'm equally unclear if there's any basis for that number (much less a transparent explanation for how it was determined). There are a bit over 200,000 farms in the UK (source: DEFRA, average 82ha almost half <20ha), not all will be family owned but if I do some back of the envelope estimations ... assume a farm generation of 30y, so a farm get inherited on average once every 30 years, and 150,000 family farms then that's 5,000 farms per year being passed on from one generation of a family to the next, and if that 500 farms per year number is correct then that's 10% of farms affected. But that percentage is pretty meaningless to each of those 500 families who may be finding it unaffordable to inherit the family farm, or at least facing additional costs in doing so.
Agree with all of that. I think it comes down to where the Treasury got their numbers from in the first place - especially given HMT’s numbers are different to DEFRA’s.
I think they actually probably thought ‘it’s only going to affect a small number of farms’ so it was politically palatable, whereas if they’d spoken to DEFRA, who think it will affect a much larger proportion of what the public would think of as farms, they might have thought again.
Essentially the policy doesn’t hit the smallest farms and ‘farms’, and the big estates will continue to dodge it on the ‘heritage’ grounds (which exists in the tax code to exempt estates you can’t possibly break up because they’re part of the national fabric - look that one up if you fancy a laugh), or because they offshore.
It squarely hits family farms in the middle of the pack. If they’ve diversified then they’ll get hit by the changes to business relief as well.
So give it to their heirs and live 7 years. Lovely, except for the last 40 years many haven’t paid into a pension because they expected to be able to draw a benefit to death. If they play the 7 year rule then they’ll have to renounce any ongoing benefit, making themselves penniless and homeless, and hoping to live in that state for at least 7 years, so their children can keep the farm.
This is why it’s a mess.
And that’s before we look under the lid at tenant farmers (which is most UK farmers - so yes, there *are* tenants out there with over a million quid of kit and no land)
Moral of the story? Do impact assessments, and talk to the relevant departments, before making changes.
I am fairly sure his pet pig won’t be worth 3 million pounds though.
Which is sort of the point. That’s fairly ludicrous, but as the Guardian points out, there are people with a paddock claiming APR who therefore are currently in the figures as ‘farmers’ - and more to the point ‘farmers who won’t be affected by the changes’
In terms of who this policy affects this is largely immaterial though as the figure to start with is the number of farms (or 'farms' if you like) claiming IHT related relief each year.
Agree with all of that. I think it comes down to where the Treasury got their numbers from in the first place - especially given HMT’s numbers are different to DEFRA’s.
I'm not sure which figures by HMT you are comparing to which figures of DEFRA's. Though as above I suspect HMT's figures are more germane here.
So give it to their heirs and live 7 years. Lovely, except for the last 40 years many haven’t paid into a pension because they expected to be able to draw a benefit to death.
I am fairly sure his pet pig won’t be worth 3 million pounds though.
Which is sort of the point. That’s fairly ludicrous, but as the Guardian points out, there are people with a paddock claiming APR who therefore are currently in the figures as ‘farmers’ - and more to the point ‘farmers who won’t be affected by the changes’
In terms of who this policy affects this is largely immaterial though as the figure to start with is the number of farms (or 'farms' if you like) claiming IHT related relief each year.
Agree with all of that. I think it comes down to where the Treasury got their numbers from in the first place - especially given HMT’s numbers are different to DEFRA’s.
I'm not sure which figures by HMT you are comparing to which figures of DEFRA's. Though as above I suspect HMT's figures are more germane here.
So give it to their heirs and live 7 years. Lovely, except for the last 40 years many haven’t paid into a pension because they expected to be able to draw a benefit to death.
Hang on, draw what benefit exactly to death?
The benefit of some of the earnings from the farm. Multi generational households still common in agriculture. If the farmer gives the farm to the next generation then under the 7 year rule they’re not allowed to derive any continuing benefits from the farm. So if they stay on the property, they have to pay rent at market rate, for example.
Some family farms are run like (the TV sitcom, for the benefit of foreign readers) Bread, with everyone sat round the table living on fresh air, cash in the china hen, and division of the proceeds (maybe £30-50k per annum, I know of one farm like that which is splitting that figure 9 ways amongst adults!)
If it stops being in the name of the person whose name it is in currently, then they have to absent themselves from the table….
I am fairly sure his pet pig won’t be worth 3 million pounds though.
Which is sort of the point. That’s fairly ludicrous, but as the Guardian points out, there are people with a paddock claiming APR who therefore are currently in the figures as ‘farmers’ - and more to the point ‘farmers who won’t be affected by the changes’
In terms of who this policy affects this is largely immaterial though as the figure to start with is the number of farms (or 'farms' if you like) claiming IHT related relief each year.
Agree with all of that. I think it comes down to where the Treasury got their numbers from in the first place - especially given HMT’s numbers are different to DEFRA’s.
I'm not sure which figures by HMT you are comparing to which figures of DEFRA's. Though as above I suspect HMT's figures are more germane here.
So give it to their heirs and live 7 years. Lovely, except for the last 40 years many haven’t paid into a pension because they expected to be able to draw a benefit to death.
Hang on, draw what benefit exactly to death?
The benefit of some of the earnings from the farm. Multi generational households still common in agriculture. If the farmer gives the farm to the next generation then under the 7 year rule they’re not allowed to derive any continuing benefits from the farm. So if they stay on the property, they have to pay rent at market rate, for example.
Yes, I've seen this a number of times and there's similar Telegraph story, so wondered if that was the source. True for a farm constituted as a business, but even then there are multiple legal means of mitigation. To go back a post, I'm also not sure that's completely accurate for pensions either, at least at one point there was a lively trade in SIPPs as wrappers to invest in farms (the language in the Telegraph hints as much without outright saying it, possibly it would undermine their own point - and in general the coverage of this issue from friendly sources is characterised by this constant evasion and slippage).
(maybe £30-50k per annum, I know of one farm like that which is splitting that figure 9 ways amongst adults!)
.. if that's sitting on an indivisible asset with a value of £5-10M they are heading for issues when it finally comes to splitting it across 3-7 children (although they might find that whether or not the 'cash isn't there' a low income coupled with a large asset beats a low income alone)
I am fairly sure his pet pig won’t be worth 3 million pounds though.
Which is sort of the point. That’s fairly ludicrous, but as the Guardian points out, there are people with a paddock claiming APR who therefore are currently in the figures as ‘farmers’ - and more to the point ‘farmers who won’t be affected by the changes’
In terms of who this policy affects this is largely immaterial though as the figure to start with is the number of farms (or 'farms' if you like) claiming IHT related relief each year.
Agree with all of that. I think it comes down to where the Treasury got their numbers from in the first place - especially given HMT’s numbers are different to DEFRA’s.
I'm not sure which figures by HMT you are comparing to which figures of DEFRA's. Though as above I suspect HMT's figures are more germane here.
So give it to their heirs and live 7 years. Lovely, except for the last 40 years many haven’t paid into a pension because they expected to be able to draw a benefit to death.
Hang on, draw what benefit exactly to death?
The benefit of some of the earnings from the farm. Multi generational households still common in agriculture. If the farmer gives the farm to the next generation then under the 7 year rule they’re not allowed to derive any continuing benefits from the farm. So if they stay on the property, they have to pay rent at market rate, for example.
Yes, I've seen this a number of times and there's similar Telegraph story, so wondered if that was the source. True for a farm constituted as a business, but even then there are multiple legal means of mitigation. To go back a post, I'm also not sure that's completely accurate for pensions either, at least at one point there was a lively trade in SIPPs as wrappers to invest in farms (the language in the Telegraph hints as much without outright saying it, possibly it would undermine their own point - and in general the coverage of this issue from friendly sources is characterised by this constant evasion and slippage).
(maybe £30-50k per annum, I know of one farm like that which is splitting that figure 9 ways amongst adults!)
.. if that's sitting on an indivisible asset with a value of £5-10M they are heading for issues when it finally comes to splitting it across 3-7 children (although they might find that whether or not the 'cash isn't there' a low income coupled with a large asset beats a low income alone)
Agree, except as is still common the eldest is still getting it all, and the other 5 siblings will continue on the same terms (in theory). They’re all in their 30s-40s now
By the way, not a Telegraph reader, this is opinion in the past couple of weeks from succession planners. It’s all a bit real round here at the moment.
I would have thought that the devil would be in the detail here.
BTW, pensions really don't work for this scenario - they are worth too much, unless they are held in multiple hands, or you have someone who has diligently been making maximum contributions into a SIPP for 20 years, and a willing provider.
I could go into the details, but this is my line of works, and I could go on about the difficulties for hours. Also, you would need to consider where the revenue would come from to actually provide retirement benefits, while at the same time allowing for an income for working farmers.
The final irony is that pensions will be entirely assessable for IHT from 6 April 2027, so that would make life worse rather than better.
From the little I know, there would be very small advantages, especially re. inheritance. Business Property Relief is being reformed at the same time as Agricultural Property Relief. As far as I know, the allowable expenses regimes are similar for the self-employed and companies, so there is no immediate advantage there. Income tax is paid on dividends when they are drawn - I suppose that's the only advantage: that you pay corporation tax on profits, rather than income tax, which is higher at certain rates of income, but as I say you also pay income tax on dividends. If there are any accountants around, they will know more than me, but that's what I have observed from a somewhat oblique angle.
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It demonstrably is, it can be borrowed against among other things, or small amounts sold off.
Also, your quoted margin of 1% is only true for people are acquiring more land to form at current prices, it shouldn't be a factor for the family farm that already inherited their current set up.
If someone inherits money over the IHT threshold they give some of it to the tax man. If they inherit a stately home they can sell a Stubbs.
A family farm of say £1.5-3m value, huge overdraft and tiny margins is being offered an exciting choice of increase the debt or reduce the size. Either way hitting the already woeful margins.
I'm going to get into trouble for saying this @Telford but your apparent naivety puzzles me at times. Given the nature of your career you'll have seen and heard things that would make our hair curl. Dealt with all sorts of wrong uns.
Yet when it comes to the press and media you seem to be willing to give them the benefit of the doubt when it comes to sensationalism and spin.
They keep telling us that very few farmers will need to pay this tax to fill the mysterious £22 billion black hole. so why were about 10,000 protesting in Whitehall today?
Because your pals at GB News have been lying to them about it.
I imagine GB News didn't question why they were there and blocking traffic rather than working, nor suggest they should maybe give up Netflix and avocados.
And yet the thing that actually triggers a protest is a tax hardly any will pay except the super rich.
But GB News have very few viewers don't they. I take it you believe the left wing propoganda. You need to wise up.
And once you lose small farmers who actually live and work on land they either own or their families have rented for generations, you'll lose other things - for example, most snow-clearing and gritting of roads in rural areas is done by local farmers, and they also help the ambulance services in remote areas where NHS vehicles can't access people who've come to grief.
@Arethosemyfeet The "super rich" won't pay IHT because their land holdings are held in a Trust.
Things might be very different for crofters, as @Arethosemyfeet has indicated.
Time will tell. I think it's certainly the case that those farmers that are protesting will be doing so for a range and variety of reasons and not only this particular issue.
Tenant farmers round here aren't rolling in money. Others are asset rich but cash poor. Others are certainly loaded. We can't generalise about an entire industry. So many different factors. My guess would be that some farmers have legitimate concerns and that others will find they have little or nothing to worry about.
That said, I think it is highly dismissive to make out that farmers are so gullible that the only reason they'd take their tractors to Westminster or to the Welsh Labour conference in Llandudno is because GB News is encouraging them to do so. Not that I have any truck with GB News. If it only had one viewer that would be one too many ... 😉
Meanwhile, I take it that @chrisstiles ascetically eschews both Netflix and avocados and subsists entirely on bread and potatoes as an act of solidarity with workers subject to the vicissitudes of global capitalism.
And that @Telford's ability to sniff out a wrong un doesn't extend to the wrong uns behind GB News or Reform or the Tory party.
And no, I don't intend taking either of them to Hell. I'm simply suggesting that things aren't as simple and clear cut as some of their posts appear to make out.
Precisely how many tenant farmers do you think have assets over £1M? Machinery depreciates over time and, if farms are as cash poor as is claimed, will be financed. I find it very hard to believe that the size of tenant farming operation with that level of assets wouldn't have a large enough turnover to cover what would still be a small tax bill over 10 years.
I've no idea how much a Netflix subscription costs as I don't have one. That's not a hair-shirt comment. I probably spend whatever the equivalent of a subscription to Netflix is on subscriptions to poetry magazines and so on. That doesn't make me any more virtuous. I'm simply choosing to spend my money in a different way.
Why is it any more acceptable to begrudge farmers avocados or Netflix than somebody else a fortnight in Blackpool or a weekly takeaway (daily in some instances) or a few pints of fizzy piss or whatever else people choose to spend money on or spend their time doing?
I mean, I've even heard it rumoured that some people like to watch GB News in their spare time. There's no accounting for taste ... 😉
Are we asking people who aren't farmers but who might struggle to make ends meet to give up their Netflix subscription or whatever else?
There is certainly food and budgetary inequality here in the UK. I remember some studies which showed that people in Easterhouse were having to spend more on food each week then the bright young things and media types in Glasgow's fashionable West End. Their only options were pricey corner shops or to take taxis to supermarkets out of their immediate area. In the West End people were spoiled for choice.
There are certainly serious matters to discuss around the inheritance tax thing and whether it will have the impact some fear and others deny.
But to engage in Puritanical jibes about avocados and Netflix seems to me to be missing the point. It only reinforces stereotypes about a Puritanical left. Those who are leftward leaning ought to be able to do better than that.
I know people who can ill afford to do so who spend more than that on a night out once a week.
Farmers are often isolated. I know people who grew up on farms who tell me the only time their parents saw anyone other than farm workers during the week was at church on a Sunday morning. They weren't particularly religious but church was their only opportunity to see anyone who wasn't connected with their farm.
I'm not going to begrudge them a Netflix subscription or an avocado at 80p from an Aldi 5 miles away.
In terms of acreage of land ownership, NT/NTS aren't at the top of the list. That list is topped by the Forestry Commission, much of it growing crops of trees, by a long way. The Ministry of Defence owns more land than NT/NTS, where potential for farming is significantly reduced by other uses (though, a lot of that land is important for wildlife, havens for the much reduced biodiversity of the UK). The Crown owns a large proportion of our countryside. Other charities own a lot of land, RSPB being the largest of those.
The cumulative total of farmland owned by aristocrats is about a third of the total, about 17% is owned by various tycoons - about 12% of farmland in the UK is owned by just 50 people.
About 5% of UKs farmland is owned by the farmers who actually work the land.
Farmers Weekly analysis of who owns Britain's farmland
It's mocking the right who use avocados (traditionally avocado toast) and Netflix subscriptions to dismiss any complaints from young people about the impossibility of ever buying a home. The right wing media suddenly stop being about personal responsibility and being frugal when it comes to their rich mates.
I don't do 'X' or Twitter as it was and am pretty 'old school' by and large.
But yes, I can see the thing about double-standards, but that isn't the sole preserve of the political right. There are liberal double-standards. There are left-wing double-standards.
But point taken in this instance.
When I was an undergraduate at Oxford one of my tutors was Estates Bursar for the college, and he told us that the college then owned about a third of Lincolnshire. Things may have changed over the past 50+ years.
Sounds like a very strange sermon
Of course assets will depreciate, and the price of livestock is going to fluctuate, as is the price of feed, etc. A reasonable standard dairy cow today will cost £1,800-£2,000 at market and the average UK dairy herd size is around 210 animals. Of course some animals will be replaced by home-bred heifers, and the cost of them from birth to production is around £4,500. As with any business, when a farming estate is valued the assets include stocks of feed, fertilisers, frozen semen, etc.
When it comes to farm buildings, you can bet that anything built of brick or stone will be assessed by HMRC using values for development, rather than as working byres or milking sheds, and that is going to push assessments up. Similarly if a farm has a cottage for a cowman that too will be included in the assessment as if it were a second home, not as a working asset.
The other elephant in the room is how farmers are meant to raise the money to pay a tax liability - yes, we've all heard the "they'll be able to pay it over 10 years" but with average farm incomes so low, how are they meant to pay the instalments?
There is a fundamental ignorance in Whitehall about the economics of farming. A rate of return on investment (profit) for farmers of 1% is considered good, and that is higher than most manage.
I can't understand how an experienced economist would make such a mistake
How so? One might question the partiality of it in a sermon which referenced laying up treasure in heaven rather than accumulating worldly wealth but the allusion did fit the theme.
But he can preach strange sermons, yes.
St John Chrysostom preached sermons which hit out at ostentatious displays of wealth, social injustice etc which got him into trouble with the Empress. Were those 'strange sermons'?
I do think the current issue with the farmers is more complicated though and from what I can gather there is some concern among Labour MPs recently elected to rural/semi-rural areas for the first time.
Interesting quote from Heseltine that he tracked left over the same time and he and Prescott found themselves usually on the same side of issues in the middle having come from opposite wings.
Well, the guidance HMRC use internally are available, and it can be verified that neither of the those things are the case:
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm24033
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm24034
Are you talking about return on investment or profit (actually profit margin) ? Because they are different things. On investment, this is only an issue for those buying farmland at current prices in order to farm it now, in which case yes, investment of that kind is a bad deal currently because of agricultural tax relief.
Raynor is proper working class but smirks far too much.
Well, is she?
Milking herds don't often buy calves, they produce their own. You get back your money from the production of calves (most cows will have at least 3 or 4 in their lifetime, organic herds tend to have a longer lifespan so produce more calves) and milk production, plus the price at slaughter. A Holstein Friesian cow weighs around 600kg and price per kg at slaughter is between 310p and 330p so you'll get around £1800-£2,000 per cow.
Having apparently not done so before making the change.
The Guardian claims that they’re going to run the numbers excluding small holders and hobbyists in order to get proper statistics on who is affected, and in what numbers. DEFRA is ‘listening’ and going to No10.
Has anyone got a spare whelk stall they’d like them to try and run?
Agricultural property relief was a political decision to buy the votes of wealthy landowners, taken by Margaret Thatcher. This now needs destroying.
Well I hated the last government too. On here.
Having said that you’re right that there are ‘fantasies’ that need ‘destroying’ - we, as I said before the election, can start with those in the minds of anyone stupid enough to vote Labour at the last election thinking they’d represent improvement rather than just a change of faces.
There have been some improvements. Minor, in the scheme of things, but we've at least stopped the ridiculous and expensive charade of trying to render people seeking asylum to Rwanda. And this government appears to at least recognise that money is a requirement for improved public services.
According to DEFRA rules a bass in my choir is a farmer because he has a pet pig.
The number of farms that are passed on to younger family members per year must be reasonably easy to determine (for a start, each of those would have applied for APR in recent years), though that number may be inflated if it includes a lot of small holdings that are not farming businesses, but owned as a hobby or other uses. What may be harder to find if the value of property isn't included in the APR application paperwork is how many of those would have exceeded the new £1.5m/£3m thresholds, and even harder if land values fall if there's less demand for people looking for tax havens. I'm still hearing the number of around 500 farms per year being subject to inheritance tax, though I'm equally unclear if there's any basis for that number (much less a transparent explanation for how it was determined). There are a bit over 200,000 farms in the UK (source: DEFRA, average 82ha almost half <20ha), not all will be family owned but if I do some back of the envelope estimations ... assume a farm generation of 30y, so a farm get inherited on average once every 30 years, and 150,000 family farms then that's 5,000 farms per year being passed on from one generation of a family to the next, and if that 500 farms per year number is correct then that's 10% of farms affected. But that percentage is pretty meaningless to each of those 500 families who may be finding it unaffordable to inherit the family farm, or at least facing additional costs in doing so.
Which is sort of the point. That’s fairly ludicrous, but as the Guardian points out, there are people with a paddock claiming APR who therefore are currently in the figures as ‘farmers’ - and more to the point ‘farmers who won’t be affected by the changes’
Agree with all of that. I think it comes down to where the Treasury got their numbers from in the first place - especially given HMT’s numbers are different to DEFRA’s.
I think they actually probably thought ‘it’s only going to affect a small number of farms’ so it was politically palatable, whereas if they’d spoken to DEFRA, who think it will affect a much larger proportion of what the public would think of as farms, they might have thought again.
Essentially the policy doesn’t hit the smallest farms and ‘farms’, and the big estates will continue to dodge it on the ‘heritage’ grounds (which exists in the tax code to exempt estates you can’t possibly break up because they’re part of the national fabric - look that one up if you fancy a laugh), or because they offshore.
It squarely hits family farms in the middle of the pack. If they’ve diversified then they’ll get hit by the changes to business relief as well.
So give it to their heirs and live 7 years. Lovely, except for the last 40 years many haven’t paid into a pension because they expected to be able to draw a benefit to death. If they play the 7 year rule then they’ll have to renounce any ongoing benefit, making themselves penniless and homeless, and hoping to live in that state for at least 7 years, so their children can keep the farm.
This is why it’s a mess.
And that’s before we look under the lid at tenant farmers (which is most UK farmers - so yes, there *are* tenants out there with over a million quid of kit and no land)
Moral of the story? Do impact assessments, and talk to the relevant departments, before making changes.
In terms of who this policy affects this is largely immaterial though as the figure to start with is the number of farms (or 'farms' if you like) claiming IHT related relief each year.
I'm not sure which figures by HMT you are comparing to which figures of DEFRA's. Though as above I suspect HMT's figures are more germane here.
Hang on, draw what benefit exactly to death?
The benefit of some of the earnings from the farm. Multi generational households still common in agriculture. If the farmer gives the farm to the next generation then under the 7 year rule they’re not allowed to derive any continuing benefits from the farm. So if they stay on the property, they have to pay rent at market rate, for example.
Some family farms are run like (the TV sitcom, for the benefit of foreign readers) Bread, with everyone sat round the table living on fresh air, cash in the china hen, and division of the proceeds (maybe £30-50k per annum, I know of one farm like that which is splitting that figure 9 ways amongst adults!)
If it stops being in the name of the person whose name it is in currently, then they have to absent themselves from the table….
Yes, I've seen this a number of times and there's similar Telegraph story, so wondered if that was the source. True for a farm constituted as a business, but even then there are multiple legal means of mitigation. To go back a post, I'm also not sure that's completely accurate for pensions either, at least at one point there was a lively trade in SIPPs as wrappers to invest in farms (the language in the Telegraph hints as much without outright saying it, possibly it would undermine their own point - and in general the coverage of this issue from friendly sources is characterised by this constant evasion and slippage).
.. if that's sitting on an indivisible asset with a value of £5-10M they are heading for issues when it finally comes to splitting it across 3-7 children (although they might find that whether or not the 'cash isn't there' a low income coupled with a large asset beats a low income alone)
Agree, except as is still common the eldest is still getting it all, and the other 5 siblings will continue on the same terms (in theory). They’re all in their 30s-40s now
By the way, not a Telegraph reader, this is opinion in the past couple of weeks from succession planners. It’s all a bit real round here at the moment.
BTW, pensions really don't work for this scenario - they are worth too much, unless they are held in multiple hands, or you have someone who has diligently been making maximum contributions into a SIPP for 20 years, and a willing provider.
I could go into the details, but this is my line of works, and I could go on about the difficulties for hours. Also, you would need to consider where the revenue would come from to actually provide retirement benefits, while at the same time allowing for an income for working farmers.
The final irony is that pensions will be entirely assessable for IHT from 6 April 2027, so that would make life worse rather than better.