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Thursday, November 21, 2024
Thursday November 21, 2024
Thursday November 21, 2024

Farmers ‘betrayed’ by new £1m inheritance tax relief cap

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The National Farmers’ Union criticises budget changes that threaten the viability of family farms across the UK

Farmers across the UK have expressed their outrage following the government’s announcement of a new cap on inheritance tax relief for agricultural assets, limiting it to £1 million. This change, introduced in the recent budget, has been met with widespread condemnation from the agricultural community, with many warning that it could jeopardise the future of family-run farms.

The National Farmers’ Union (NFU) described the new policy as a “disastrous budget” for family farms, arguing that it would “snatch away the next generation’s ability to carry on producing British food.” They fear that the limit could compel farmers to sell off land to settle inheritance tax obligations, potentially reshaping the landscape of UK agriculture.

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Impact of the £1m Cap

Under the revised tax structure, while there will be no inheritance tax on combined business and agricultural assets valued at less than £1 million, any value above that threshold will be subject to a 50% relief rate, effectively imposing a 20% tax. For many small family farms, which traditionally rely on Agricultural Property Relief (APR) to transfer assets down the generations, this change represents a significant setback.

Somerset farmer Richard Payne articulated the despair felt by many in the industry, stating he has already advised his son to consider careers outside of farming due to the new tax implications. He stressed that the £1 million cap would only benefit the smallest farms and could result in larger businesses purchasing land from struggling family farms. “Right across the land, there will be a sea-change for the worse,” Payne lamented, predicting a shift toward larger, less sustainable farming operations.

Voices from the Farming Community

Reactions from farmers have flooded social media, with figures like Jeremy Clarkson and Kirstie Allsopp joining the chorus of discontent. Clarkson, known for his programme Clarkson’s Farm, urged farmers not to despair, suggesting they merely need to endure for a few more years until the government changes. Allsopp decried the Chancellor’s decision as one that would undermine farmers’ ability to pass their estates onto the next generation, showcasing a lack of understanding of rural issues by the government.

Holly Purdey, a farmer and vice-chair of the Nature Friendly Farming Network, acknowledged that while the cap could be detrimental to small farms, it might inadvertently create opportunities for new entrants to the market if larger farms are forced to sell land. “Longevity and generational thinking are often key motivators for farmers to care for the land,” she noted, highlighting the potential long-term impact of the policy shift.

Political Reactions

The announcement has not only drawn ire from farmers but also criticism from political figures. Steve Barclay, the Shadow Secretary of State for Rural Affairs, accused Labour of breaking a promise made to the agricultural sector regarding tax relief. Victoria Vyvyan, president of the Country Land and Business Association, termed the cap a “betrayal” and warned that approximately 70,000 farms could be adversely affected by the changes, threatening the livelihoods of those in the farming community.

Tom Bradshaw, president of the NFU, reiterated the sentiments of many farmers, labelling the budget as disastrous and a direct attack on family farming. He expressed concern that the policy would hinder farmers’ ability to produce food sustainably and invest in their future.

Government’s Stance

In response to the backlash, the government maintained that the changes would only affect around 2,000 estates annually and reiterated its commitment to support farmers. Food Security Minister Daniel Zeichner insisted that the government’s dedication to the agricultural sector remains “steadfast,” despite the controversial changes.

The government also confirmed it would maintain the £2.4 billion farming budget for England in 2025/26, seeking to assure farmers of ongoing support. However, for many in the agricultural community, the newly imposed inheritance tax cap threatens the very foundation of family farming and could significantly alter the dynamics of UK agriculture for generations to come.

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