Farmers criticise Labour's 'disastrous' £1m inheritance tax relief limit in budget

Summary

Farmers in the UK are worried about the potential impact of new inheritance tax relief limits on their livelihoods. The government's proposal to impose a £1 million cap on farmland inheritance tax relief has left farmers like Paul Tom, who runs a dairy farm, fearing for their future. Although only a small percentage of the largest estates are expected to be affected, critics argue that up to 70,000 smaller farms could suffer. With rising concerns about food prices and the stability of small farms, many farmers are calling for a reversal of the decision to protect farming legacies and ensure a sustainable future.

Takeaways

• 😀 The UK's farming industry is struggling, and many small farms face significant challenges.
• 😀 Farmers, like Paul Tom, fear that changes in inheritance tax relief will harm their family's legacy and future.
• 😀 The new £1 million limit on inheritance tax relief could impact up to 70,000 farms, even though the government claims only the largest estates will be affected.
• 😀 Financial experts argue that the inheritance tax changes could still benefit some farms more than others.
• 😀 About 75% of England's farms are smaller holdings, and many struggle to turn a profit, with 177% of farms making no profit at all.
• 😀 England's farms made an average profit of £86,000 last year, but many smaller farms are financially unstable.
• 😀 Farmers worry that the inheritance tax changes could disrupt their ability to pass down their farms to the next generation.
• 😀 One way to avoid inheritance tax is to transfer assets seven years before death, but this approach has limitations, such as hindering the farmer's ability to borrow or access environmental schemes.
• 😀 The government’s plan to limit inheritance tax relief is viewed as unfair by many in the farming community, particularly small-scale farmers.
• 😀 Some argue that reversing the inheritance tax change could help stabilize the farming industry and keep food costs lower.

Q & A

What is the primary concern raised by Paul Tom in the script?

Paul Tom's primary concern is for the future of his children and the potential impact of inheritance tax changes on their ability to inherit the family farm.

How might the new inheritance tax relief changes affect small farms?

The new inheritance tax relief changes, with a £1 million limit, could negatively impact small farms, particularly those with less than 100 hectares, making it difficult for families to pass down their farming legacy.

What specific change to inheritance tax relief is causing concern for farmers?

The new £1 million limit on inheritance tax relief for farmland is the specific change causing concern, as it may lead to large tax liabilities upon the death of a farm owner.

What is the government's justification for the inheritance tax changes?

The government justifies the changes by asserting that only around 2,000 of the largest estates will be affected, implying the impact on small farms will be minimal.

Do financial experts agree with the government's assessment of the tax changes?

Some financial experts agree with the government's assessment, stating that the changes will affect a small number of the most valuable farms, and the majority of farms will not be impacted.

How many farms in England are smaller than 100 hectares?

Approximately 75% of farms in England are smaller holdings of less than 100 hectares.

What is the average profit made by farms in England, and what percentage of farms made no profit?

The average profit made by farms in England last year was £86,000, but 17% of farms made no profit at all.

What is one way farmers can avoid inheritance tax, and what are the drawbacks?

One way farmers can avoid inheritance tax is by handing down their assets seven years before death. However, this means farmers cannot borrow against their assets or apply for certain environmental schemes, and they cannot predict when they might pass away.

What would Paul Tom prefer the Chancellor to do regarding the inheritance tax changes?

Paul Tom advocates for the Chancellor to completely reverse the decision on inheritance tax changes to protect the future of farming and keep food costs down.

How do farmers feel about the first Labour budget in over a decade?

Farmers feel the first Labour budget in over a decade has been disastrous for small farms, with many expressing concerns about its negative impact on their future and the legacy of family-run farms.