[News] Farmers

[MJsGhost]

Looking past the shouty nonsense, I think that Charlie was trying to make a point to JO'B that the inflation relating to land prices is so far out of step with the increase in farm revenues since the last time tax was imposed on inherited farms (prior to 1984), that comparisons between then and now are of limited value. I could be wrong - most of what he seemed to be trying to say was lost to petty insults and shouting.

Anyway... what I see as the nub of this issue:

Because of its attractiveness as a shelter from IHT, the value of agricultural land/farms has increased far beyond what would be expected if the value were based purely on ability to produce revenue from food (partly because food prices remain low, driven by supermarket and food producer cartels—who, to be fair, are simply responding to the general public's demand for cheap food).

As a result, farms become high-value assets with significant IHT liabilities. But as farming businesses, their earning-to-cost ratios are low, making it difficult to pay the tax when profits are already slim.

Now, with IHT being levied, farmers will see the value of their asset tumble (maybe that's what they are really protesting about?), but are still stuck with low food commodity prices without the handy tax break of no IHT in the long term.

It's a difficult situation to sort out, with a double blow for the farmers of lower farm values and an extra tax to pay (though of course, if the asset falls below the threshold, there will be no IHT to pay, so all most will have to swallow is a decrease in the value of their farm )

IMO. what is really needed is a grown up conversation about the real cost of sustainable farming/food. A fair price for produce, but an environmentally sustainable and ethical approach. The trouble is, one only has to compare the price of organic, free range chicken, with a basic battery bird to see this will mean huge increases in the cost of food for consumers. Maybe we'd all stop wasting so much food if it cost more? (Someone will hopefully correct me if I'm wrong, but doesn't something like a third of food bought in the UK end up in the bin?)

Thinking about it further, part of the high value of land now will be at least an element of 'hope value' - believing a change of use could be granted, opening up more lucrative possibilities (housing anyone?!). Labour's promise to get Britain building might embolden investors to try to turn more farms into housing estates, which could prop up land value... all is not lost farmers!

I appear to be rambling - there are more layers to this than first meets the eye!

 

[ManOfSussex]

Good job she left school before the private school VAT changes or we might have needed to start a 'go fund me' page for her!

She went to Cambridge after that too as typical, ordinary working class northern girls from £10m farms just outside Harrogate often do.

 

[dazzer6666]

And golf courses. During a debate on homelessness, it was stated there was more land used for golf courses than for housing.
I’m not 100% sure about that, but it made me think.

More closing than opening - just in the immediate area Hassocks is now a housing estate, Waterhall has been 'rewilded', and the Burgess Hill par 3 course will be a housing estate in a few years time. Lots of courses struggling financially.

 

[dazzer6666]

Looking past the shouty nonsense, I think that Charlie was trying to make a point to JO'B that the inflation relating to land prices is so far out of step with the increase in farm revenues since the last time tax was imposed on inherited farms (prior to 1984), that comparisons between then and now are of limited value. I could be wrong - most of what he seemed to be trying to say was lost to petty insults and shouting.

Anyway... what I see as the nub of this issue:

Because of its attractiveness as a shelter from IHT, the value of agricultural land/farms has increased far beyond what would be expected if the value were based purely on ability to produce revenue from food (partly because food prices remain low, driven by supermarket and food producer cartels—who, to be fair, are simply responding to the general public's demand for cheap food).

As a result, farms become high-value assets with significant IHT liabilities. But as farming businesses, their earning-to-cost ratios are low, making it difficult to pay the tax when profits are already slim.

Now, with IHT being levied, farmers will see the value of their asset tumble (maybe that's what they are really protesting about?), but are still stuck with low food commodity prices without the handy tax break of no IHT in the long term.

It's a difficult situation to sort out, with a double blow for the farmers of lower farm values and an extra tax to pay (though of course, if the asset falls below the threshold, there will be no IHT to pay, so all most will have to swallow is a decrease in the value of their farm )

IMO. what is really needed is a grown up conversation about the real cost of sustainable farming/food. A fair price for produce, but an environmentally sustainable and ethical approach. The trouble is, one only has to compare the price of organic, free range chicken, with a basic battery bird to see this will mean huge increases in the cost of food for consumers. Maybe we'd all stop wasting so much food if it cost more? (Someone will hopefully correct me if I'm wrong, but doesn't something like a third of food bought in the UK end up in the bin?)

Thinking about it further, part of the high value of land now will be at least an element of 'hope value' - believing a change of use could be granted, opening up more lucrative possibilities (housing anyone?!). Labour's promise to get Britain building might embolden investors to try to turn more farms into housing estates, which could prop up land value... all is not lost farmers!

I appear to be rambling - there are more layers to this than first meets the eye!

Simpler answer might have been to separate the real farms from those bought as tax avoidance assets.................

 

[MJsGhost]

Simpler answer might have been to separate the real farms from those bought as tax avoidance assets.................

Yes, but how do you distinguish a farm legitimately bought by an investor to run it as a farm from one bought as an avoidance asset?

I presume even the avoiders install/keep a farm manager and keep on running it as a business?

 

[dazzer6666]

Yes, but how do you distinguish a farm legitimately bought by an investor to run it as a farm from one bought as an avoidance asset?

I presume even the avoiders install/keep a farm manager and keep on running it as a business?

Dunno - perhaps a simple 'primary asset' or 'primary business/source of income' test ? Easy enough to cross-check with the data HMRC have at their disposal - much the same as treatment of second homes for CGT purposes etc. Just distinguish between where it's your livelihood or an 'investment'

 

[MJsGhost]

More closing than opening - just in the immediate area Hassocks is now a housing estate, Waterhall has been 'rewilded', and the Burgess Hill par 3 course will be a housing estate in a few years time. Lots of courses struggling financially.

As a keen golfer (well, I was before the kids came along and stole all of my spare time), even I think that so many golf courses are a waste of land that could be put to much better use (e.g. the rewilding of Waterhall).
Hassocks was a course I hated for no particular reason, so I'm happy to see that under tarmac

 

[PILTDOWN MAN]

Yes, but how do you distinguish a farm legitimately bought by an investor to run it as a farm from one bought as an avoidance asset?

I presume even the avoiders install/keep a farm manager and keep on running it as a business?

As I posted earlier why not date it. Farms/land owned before a certain date will remain exempt those after or parts thereof are. If a traditional farm has bought further land it is that land that is used for calculation.

Not exactly a hard thing to determine.

 

[abc]

I was talking to the manager of a large farm a couple of months ago, he was telling me that the value of farmland had increased from £2000 an acre in the early 2000's to nearly £12,000 an acre in 2024. This had left his boss an extremely rich person but the problem was that the productive capacity of the farmland was now extremely low when compared with the value of farmland. Farmland should produce an economic return that is relatable to its value and the return on the capital employed, but this is now completely out of kilter. Buying farmland doesn't make economic sense based in the returns that you get, yet there is no shortage of buyers and many of them - 56% in 2023 were non-farmers (https://farming.co.uk/news/strutt--...t-more-than-half-of-farms-and-estates-in-2023). Now it doesn't take a genius to work out what's been causing all these non farming investors to pile in over the past 20 years, the inheritance tax loop-hole that buying farmland affords! Surely It therefore makes perfect sense for the government to shut this loophole and to stop the transfer of land from farmers to investors who are buying it purely as a financial instrument that allows them to minimise their taxes.

This is correct. Therefore the right approach would be for some form of mechanism that closes this loop hole but enables proper working farms to be passed down to proper working farming members of proper working farmers. The gov have failed to work this out and now are refusing to admit that there is a need for a more nuanced approach.

 

[abc]

There’s been suggestions that trusts or converting to a limited company will help? Why not convert to a limited company?

Because it doesnt help

 

[dazzer6666]

As a keen golfer (well, I was before the kids came along and stole all of my spare time), even I think that so many golf courses are a waste of land that could be put to much better use (e.g. the rewilding of Waterhall).
Hassocks was a course I hated for no particular reason, so I'm happy to see that under tarmac

Waterhall was useful in the winter when all the lower-level courses were flooded........and I hated Hassocks as well

 

[nicko31]

A few months ago we were told state schools would be consumed by an exodus from private schools.

Now we're being warned of famine by next summer.

The rich certainly know how to get their voices heard

 

[abc]

Still shocking.

Imagine voting 52/48 to have one's goolies cut off?

Reflects the age strata of farmers at the time. However, it is worth noting that the NFU and the majority of farmers were in favour of subsidies being removed (the main consequence of leaving the NFU) in favour of simply being paid a fair price (ie above, not below, the cost of production). Unfortunately the subsidies have gone but farmers are still not paid a fair price.

 

[MJsGhost]

Dunno - perhaps a simple 'primary asset' or 'primary business/source of income' test ? Easy enough to cross-check with the data HMRC have at their disposal - much the same as treatment of second homes for CGT purposes etc. Just distinguish between where it's your livelihood or an 'investment'

IMO, it's difficult to then justify why other businesses that pass a 'primary asset' or 'primary business/source of income' test are subject to IHT.

I think my overall point on all of this is that the farming model is broken due to low prices for the food produced. Sort that out and measures introduced to prop up farmers (e.g. no IHT) can be withdrawn.
However, tripling people's food bill is never going to be a vote winner and significant food inflation would put upward pressure on benefits and state pension, costing far more than the tax collected from IHT on farms.... F**k me, who'd be a politician?!

 

[MJsGhost]

Waterhall was useful in the winter when all the lower-level courses were flooded........and I hated Hassocks as well

Yes, but only if you can't get a tee time at Lewes, Pyecombe, East Brighton, Seaford Head...

From October to March, Mid Sussex is unplayable anytime someone spills a bottle of water

 

[dazzer6666]

Yes, but only if you can't get a tee time at Lewes, Pyecombe, East Brighton, Seaford Head...

From October to March, Mud Sussex is unplayable anytime someone spills a bottle of water

Corrected for you

 

[ROSM]

Am I the only one who saw this thread earlier and wondered if it was to do with haemorrhoids?

We've gone from thinking about piles to worrying about how Clarkson will cope with his piles of cash

 

[nicko31]

Looking past the shouty nonsense, I think that Charlie was trying to make a point to JO'B that the inflation relating to land prices is so far out of step with the increase in farm revenues since the last time tax was imposed on inherited farms (prior to 1984), that comparisons between then and now are of limited value. I could be wrong - most of what he seemed to be trying to say was lost to petty insults and shouting.

Anyway... what I see as the nub of this issue:

Because of its attractiveness as a shelter from IHT, the value of agricultural land/farms has increased far beyond what would be expected if the value were based purely on ability to produce revenue from food (partly because food prices remain low, driven by supermarket and food producer cartels—who, to be fair, are simply responding to the general public's demand for cheap food).

As a result, farms become high-value assets with significant IHT liabilities. But as farming businesses, their earning-to-cost ratios are low, making it difficult to pay the tax when profits are already slim.

Now, with IHT being levied, farmers will see the value of their asset tumble (maybe that's what they are really protesting about?), but are still stuck with low food commodity prices without the handy tax break of no IHT in the long term.

It's a difficult situation to sort out, with a double blow for the farmers of lower farm values and an extra tax to pay (though of course, if the asset falls below the threshold, there will be no IHT to pay, so all most will have to swallow is a decrease in the value of their farm )

IMO. what is really needed is a grown up conversation about the real cost of sustainable farming/food. A fair price for produce, but an environmentally sustainable and ethical approach. The trouble is, one only has to compare the price of organic, free range chicken, with a basic battery bird to see this will mean huge increases in the cost of food for consumers. Maybe we'd all stop wasting so much food if it cost more? (Someone will hopefully correct me if I'm wrong, but doesn't something like a third of food bought in the UK end up in the bin?)

Thinking about it further, part of the high value of land now will be at least an element of 'hope value' - believing a change of use could be granted, opening up more lucrative possibilities (housing anyone?!). Labour's promise to get Britain building might embolden investors to try to turn more farms into housing estates, which could prop up land value... all is not lost farmers!

I appear to be rambling - there are more layers to this than first meets the eye!

Good point to bring up a fair price for food, sustainable farming. ethical produce etc

But, the hard reality is Brits have a poor relationship with food, buying quality isn't a priority even if they can afford it. A holiday, a new car or being able to have 2 takeaways a week is more important.

People ain't queueing for their poulet fermier at the butchers on the weekend

 

[Herr Tubthumper]

Because it doesnt help

Why, in your opinion, not?

 

[Harry Wilson's tackle]

Reflects the age strata of farmers at the time. However, it is worth noting that the NFU and the majority of farmers were in favour of subsidies being removed (the main consequence of leaving the NFU) in favour of simply being paid a fair price (ie above, not below, the cost of production). Unfortunately the subsidies have gone but farmers are still not paid a fair price.

I am not entirely familiar with the workings of the free market economy but if it is cheaper for supermarkets to fly in food from Chile then does it not mean that the local farms are not economical?

(I presume you have in mind that multinational supermarkets tell farmers what they are prepared to pay and farmers have to lump it.)

I'll have to try that myself when I go shopping - tell the seller what I am prepared tp pay. I may have a go at that on Amazon later.

(Something doesn't add up here.....you make it sound like the relationship between farmers and their customers is some sort of apocylaptic 1984 style commercial dictatorship. Perhaps it is. If so, propping this system up by giving farmers unfair tax breaks does not seem appropriate.).