Farm Diary: If succession is handled properly, there will be no inheritance tax to pay
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The budget, tax and the aftermath of it all continues to dominate the media as more businesses are affected; farmers, small businesses, some medical practices, care homes and so on, the list grows every day. Farmers are in London this week meeting their MP’s and others marching and protesting against the inheritance tax which was announced in the budget. How does one take a dispassionate view of all this?
We all agree the country is in a mess, nothing works, and public services are on their knees. Covid is partly responsible, but terrible mistakes, misjudgements and some ideological decisions have made things a great deal worse over the last 14 years.
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Hide AdA majority of farmers voted for Brexit, some for reasons they strongly believed in (sovereignty and so on), but the majority were angry, squeezed (it can’t be worse than this?) and fed up – lashing out. All this happened under the Conservatives, the party of rural England (also of sound economics, law and order and so on).


It shows how few friends we as farmers have, sacrificed in the trade deal which followed for a quick post Brexit win. Other countries keep farmers off the trade deal table, we were on offer, and Australians, New Zealand, American farmers and others could not believe their luck.
So here we are, all wanting to see the country back on its feet, with good investment in public services, including badly needed capital spending on infrastructure, but with meaningful reform in order to make sure the money is well spent and that the return is there to show for it. There is only one problem, and that is that no one wants to pay for it and politicians on both sides have sort of pretended it can be done for free: until now.
Crunch time has arrived, and how. The Labour Party was elected and has the task of rising to this challenge, and it has made its choices and no one to my knowledge who dislikes their choices have told us which taxes they would raise. There has been such a fuss made about taxation of late, that income tax, VAT, and national insurance are off the table, and fuel duty also seen as taboo.
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Hide AdThis crazy situation has meant that other means of raising money had to be found, and a combination of wealth taxes and employer national insurance have been chosen.
The Labour Party has milked the dire state the country was left in by the Conservatives for all its worth, and now the Conservatives are shouting that Labour always put up taxes. They know full well that they too would have put up taxes but are not willing to say which ones.
Tax rises are always unpopular, but the silly rhetoric of ‘not taxing working people’, gave the media and everyone a field day; not that it helps one jot.Farmers are up in arms! Well, some are, the noisy ones that dislike the Labour Party intensely and others who mistakenly think that this is a disaster for our industry.
The NFU has got itself into a pickle yet again, failing to take the steam out of this and now will see a march in London take all the publicity away from its more measured approach of bringing farmers and their MP’s together to discuss the issues rationally and what needs to be done.
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Hide AdThe NFU, CLA, others who should know better have been shouting that this is the end of family farms (it is not), a catastrophe for the countryside (tell me how) and a real threat to food security (nonsense).
There are many others who are keeping quiet, with only a handful willing to put their heads above the parapet, arguing that this is a gross over reaction and silly. The farmer march will no doubt have speakers address them, and it will not surprise me if Nigel Farage and Jeremy Clarkson are amongst them.
The NFU made a huge mistake in getting too close to Jeremy Clarkson a while back and it all went pear shaped as anyone with an ounce of common sense knew it would, when he made some very unsavoury comments about the Conservative government at the time. Its at times like this that one needs strong leadership and cool heads, the NFU must work closely with this government for a number of years, and this is not a good start.
We all had a futile march against Tony Blair in the 1990’s, protesting that the Labour Party then were against the countryside, and it turned into a protest against foxhunting, a big mistake. This will be another march that changes little as it is very difficult to explain to the man or woman on the street that you are very poor despite assets of several million!
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Hide AdIt is true of course that returns are very low in farming and land price is now stratospherically high, assets do not pay bills, but farmers pleading poverty? We are well known for that.
The truth is that inheritance tax on land will be good for our industry, it will prevent land prices from going further and further out of reach of farmers, young people and new entrants.
The price of land has shot up, and only 43% of buyers are now farmers (down from 66% in the past). Jeremy Clarkson after all bought his farm for tax reasons and has bragged about it. Investors in land who want to avoid inheritance tax will be caught and that is its main purpose. Inheritance tax will force farmers to confront succession (38% farmers are over 65years of age), something which many have not bothered with, causing lack of innovation and fossilisation of our industry on many family farms.
If succession is handled properly in good time, there would be no tax to pay anyway.
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Hide AdThere will be more opportunities for tenant farmers and whilst a handful of farmers and landowners overreact (as some dairy farmers did when milk quotas came in), this will pass. We have coped with a lot more than this and some concern over the future of farming could sharpen the pencils of the supply chain.
This brings me to my last point. How can we as part of an exciting and dynamic industry entice the bright young things into our industry when we are all in despair and the President of the NFU looks so glum?
Prices of lamb and beef and milk are good, the weather has improved, we have massive public support and a way of life and lifestyle to be envied in the main.
Why would an asset rich if cash poor industry not be willing to put its shoulder to the wheel? Many others in the food industry such as pubs and restaurants have it much harder and work just as hard; not in all weathers maybe, but we are either in buildings or warm, comfortable tractor cabs these days.
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Hide AdYes, there should be a few changes to this tax, such as giving the old boys who have not prepared for succession some extra time and making the tax transferable.
After all, we have only had the 100% exemption since 1984 for goodness’ sake, it was the same as proposed by this government before that.
The litmus test is will the next Conservative government reverse this tax? Of course they won’t.