Why are Farmers Complaining

Fluffysheep7

Could somebody on a purely taxation basis explain why Framers are complaining over Inheritance Tax. They get an extra £1m allowance and pay at half the normal rate and have 10 years to pay. Most importantly unlike SIPPs they can use Potentially Exempt Transfers to pass on entire operating farms to future generations. I can see the unfairness on those who may die between April 2027 and 7 years from now but are the rest just being lazy in not sorting out succession?.

flaneurs_lobster

Fluffysheep7 said:

Could somebody on a purely taxation basis explain why Framers are complaining over Inheritance Tax. 

It's an edge case. 

ComicGeek

Perhaps they aren't seeing the full picture

Moonwolf

The problem that many see is that income from farms is pretty much borderline so there may not be enough to pay off any loans required to pay inheritance tax.  This would lead to the break-up of family farms and the loss of important farming businesses.

500 is quite a large proportion of farms.

On the other side of the coin.  Farm prices have been inflated by the likes of James Dyson and Jeremy Clarkson buying farms just for inheritance tax avoidance.  Even if they only break even as a business they are still saving a lot of IHT.  A reduction in farm prices might mean even fewer farms come under that umbrella.

The problem is how to have a sensible tax policy that protects family farms without them being used as an inheritance tax wheeze for the rich. I don't think we should have a situation where Dyson avoids it but more ordinary citizens pay it.

Marcon

Fluffysheep7 said:

Could somebody on a purely taxation basis explain why Framers are complaining over Inheritance Tax. They get an extra £1m allowance and pay at half the normal rate and have 10 years to pay. Most importantly unlike SIPPs they can use Potentially Exempt Transfers to pass on entire operating farms to future generations. I can see the unfairness on those who may die between April 2027 and 7 years from now but are the rest just being lazy in not sorting out succession?.

Plenty of people can. Google on your question and you'll get various commentators doing just that.

leosayer

Moonwolf said:

The problem that many see is that income from farms is pretty much borderline so there may not be enough to pay off any loans required to pay inheritance tax.  This would lead to the break-up of family farms and the loss of important farming businesses.

500 is quite a large proportion of farms.

On the other side of the coin.  Farm prices have been inflated by the likes of James Dyson and Jeremy Clarkson buying farms just for inheritance tax avoidance.  Even if they break even they are still saving a lot of IHT.  A reduction in farm prices might mean even fewer farms come under that umbrella.

The problem is how to have a sensible tax policy that protects family farms without them being used as an inheritance tax wheeze for the rich. I don't think we should have a situation where Dyson avoids it but more ordinary citizens pay it.

Exactly this.

The only reason why farmland is currently so valuable is because it is being used as an IHT avoidance vehicle.

twopenny

I live in a huge farming area. Many of the farms here are sold off to the wealthy for the houses and location. The land is sold off seperately.

With the hours of work 24/7 in all weathers they deserve some reward. What they are paid for produce is not good enough, we want cheap food so we can afford fancy bathrooms and holidays.

Frankly if that means they get a benefit to keep going and we're getting food we can afford, I'm all for that.

I'd rather have my food fresh from my own country too.

gwynlas

Farmers can not easily downsize to raise capital to pay tax as this defeats the object of passing on the family farm.

Similar tssues caused the demise of many large estates where owners were asset rich but cash poor.

With the climate problems evident in Spain from where much our produce comes we shouldd be looking at farmers to actively grow as much as possible for our local consumption. 

French farmers are historically much more militant than those in the UK hence they ignored or demonstrated against much more EU legislation that burdened small business

Triumph13

twopenny said:

I live in a huge farming area. Many of the farms here are sold off to the wealthy for the houses and location. The land is sold off seperately.

With the hours of work 24/7 in all weathers they deserve some reward. What they are paid for produce is not good enough, we want cheap food so we can afford fancy bathrooms and holidays.

Frankly if that means they get a benefit to keep going and we're getting food we can afford, I'm all for that.

I'd rather have my food fresh from my own country too.

Me too, but if farming profitability is as marginal as you say, then land prices should be virtually zero.  Once the land is properly priced, rather than being inflated by its use as a tax dodge, then the IHT issue largely goes away.  I work for an accounting firm and you'd be amazed quite how many of the partners became farmers in recent years.

The transition will be incredibly painful - the people I feel most sorry for are the genuine farmers who have borrowed to buy land at inflated prices - but hopefully those prices are going to crash as the rich move their money elsewhere.  The people who should benefit are the next generation of would be farmers, who should now be able to buy sensibly priced farm land.  Farming is doomed if the only people who can afford to farm are those who inherit a farm and those who are already rich.

movilogo

Farmers are complaining because they want special privilege!

Before budget farmland was exempt from IHT. Now there will be £1m limit - like all other assets. This limit can rise up to £3m under certain circumstances.

Beyond this limit, farmers will pay 20% IHT, where as rest of the people will pay 40% IHT. 

So farmers still have some privilege and they want more i.e. have the cake and eat it too.

There can be following logics

1. Abolish IHT altogether - I support it.
2. Apply same rule for all assets - no exception for farmlands - I support it.
3. Apply special rule for farmers - I don't support it.

UK is a mess because everyone wants special rules. The monarchy does not pay IHT at all. Why is that? 

Some farmers are very wealthy and farming lobby is a powerful one. Previously billionaires purchased vast amount of farmland knowing they'd pay no IHT but now they are upset as their plans are not working to work. So they are instigating normal farmers who probably not going to be affected by the new change anyway. 

daveyjp

Farming sits in that world of being a commercial enterprise, but also considered by government as being an essential public service to ensure food security, hence the never ending state subsidy regimes over the years.

For example this subsidy system will now pay farmers a guaranteed income to grow wild flowers or leave land in stubble and fallow, rather than grow food in order to meet biodiversity targets - a public good that affects food security.

I did hear one farmer saying farms will be lost and he sold a farm which was purchased by a large insurance company.  He didn't seem to comprehend that it was sold to a large insurance company because he sold it to them as they offered the most money for it.