[News] Farmers

[Westdene Seagull]

Surely the simple solution is that the tax only becomes payable when the farm is sold? No benefit for tax avoiders if they can't sell the land. No penalty for farmers who genuinely want to hand the farm down.

Agreed BUT the government are arguing that they absolutely NEED this extra money.

 

[PILTDOWN MAN]

Reeves took a hammer to crack a tax avoidance ‘nut’. Some say it’s spite against a non Labour cohort.

Discussed even on nsc pre budget. There are two types of rural landowner. Genuine farmers who own and farm the land, very often for generations. The land has significant value despite modest profits because rich folk or house builders want to buy it up. I’ve seen farmers accounts showing the modest profits, I doubt anyone else here has. Supermarkets have all the power.

Then wealthy tax avoiders such as Clarkson.

On future deaths both categories will be required to pay substantial IHT. Category 1 do not have the cash.

Requiring the selling up of land and businesses.

We know 2024 Brits don’t want to work crazy hours, pre Brexit we relied on harder working foreigners to do that, post pandemic millions including teens/20’s have said fck the rat rice I want to enjoy life.

So who’s going to replace the farmers selling up? In the mid to long term this will damage the fabric of our countryside, a load of non farming chancers will buy up land, scar it in furtive attempts to get planning for a home or three, we may well have to import more food.

Bizarrely this is ideological from the left. On NC’s phone on this a few weeks ago, a couple of callers said spitefully it’s payback for the farmers being quiet in the 1984 miners strike, another for challenging Labour on fuel prices in 2001. WTF! The internet has created a load of weirdos at both ends of the political spectrum.

Average age of a farmer in this country is 59, 33% are over 65. Most work every day of the year, long hours, most well below minimum wage and many on their own.

Just from my experience when I farmed, I made about £25 profit per pig and £18 per lamb.

There's already a crisis in farming in getting young people to work the land. Those that do inherit the family farm, where margins are so low will now be put under further financial pressure. Easy for these townies to say sell some of your land then not understanding that all the land is needed just to scrape a living.

To suddenly change the rules doesn't leave the average farmer of 59 to plan for the farms future.

At a time when we all should be looking for local sourced food this government is putting a lot of these businesses under huge pressure.

It is without doubt a very damaging policy.

When people on the radio or TV bang on about Clarkson are totally missing the point and also not listening to what he says. He, to many is just a millionaire idiot. He does though highlight the very issue faced by many many farmers. The red tape, how hard it is to make a profit. He can afford it many can't. He actually does far more good in educating people than say Countryfile that views the countryside as honey and milk.

Sorry HWT you are very wrong.

 

[andy_eg]

I'm trying to keep up with this.
From what I understand, a farm owned by a couple will bring in an anual profit of £50K to £100K, for which they work hard.
But the value of the land will be around £5million, thus when they die and the kids take over, the kids have to pay 20% of the value. Let's say £1million tax due.
Now they can pay that over 10 years thus £100,000 a year. But that would be their entire profit gone.
Think that's how it is.
But, like anything, there are ways around this. Just needs a good accountant.

BBC have done a fact check on how many farms and how much they may have to pay, make of it as you will.

How many farms would be affected by Budget changes?

Estimates of the number of farms affected range from 100 to 70,000.

www.bbc.co.uk

Seems much more complicated than the headlines make out, as it often the case.

 

[WATFORD zero]

I'm trying to keep up with this.
From what I understand, a farm owned by a couple will bring in an anual profit of £50K to £100K, for which they work hard.
But the value of the land will be around £5million, thus when they die and the kids take over, the kids have to pay 20% of the value. Let's say £1million tax due.
Now they can pay that over 10 years thus £100,000 a year. But that would be their entire profit gone.
Think that's how it is.
But, like anything, there are ways around this. Just needs a good accountant.

In the same way most people can pass on £1m tax free before IHT, Farmers have special dispensation whereby they can pass on £3M before tax. And, on the remainder, instead of paying 40% tax, they have a special dispensation whereby they only pay 20% tax. So, on £5M it would be approx £400,000 which due to the further special dispensation to pay over 10 years, ends up at c40K pa, and that's before their accountants and standard business practices get hold of it.

My kids, in a similar situation, but me not being a farmer would have to pay £1.6M immediately

One on the box this morning claimed it’ll cost him £800k

So without get the abacus out that values his farm at £4 mil.

I’m struggling to side with him.

Ahem ... £7M

 

[Peacehaven Wild Kids]

Well he can't spend the £4m can he?

If he passes it on then provision needs to be made otherwise it’s a massive tax dodge that the majority of this country are crying out against.

 

[Westdene Seagull]

All things considered IHT on farms seems fair, and as far as I can tell it can be mitigated if they bring their businesses into the modern world.

Please detail these mitigations you speak of.

 

[Weststander]

It’s a tough sell to convince joe public that this levy isn’t a rich person’s problem, and a marginal one at that.
Much like VAT on private school fees.
In both cases, I find myself asking “why was this legal tax dodge ever in place, and how has it lasted so long?”.

The rest of Europe don't charge VAT on school fees, it's a mandatory EU block, because it's education. Private included.

 

[Bold Seagull]

Somewhat depends if you want food on your table. A farm is a business and if farmers estates are forced to sell them to pay IHT then they will be either snapped up by big corporate farm businesses who care little about the environment & animal welfare and more about profits. Or the farms will get built on meaning having to import even more food and supermarket prices will go up.

Precisely the reason so many estates have been bought by your Clarkson's with a view of avoiding IHT. I don't remember anyone posting that the IHT exception has created the exact same concern you have for food security. Farmer sells to investor for IHT saving purposes vs farmer sells because of IHT liability. Same difference if you're concerned about retention of farms from investors and big business.

 

[PILTDOWN MAN]

All things considered IHT on farms seems fair, and as far as I can tell it can be mitigated if they bring their businesses into the modern world.

A very simplistic view

 

[Westdene Seagull]

My kids, in a similar situation, but me not being a farmer would have to pay £1.6M immediately

Do your assets produce anything for the wellbeing of the public ? Like providing food ?

 

[Since1982]

I do understand that its not easy to suddenly pay an IHT bill if your wealth is all tied up in land that is by definition hard to get at. That poses an issue for some older farmers when the new rules come in and possibly needs further thought by the govt. I know a couple a farmers and its a reasonable concern, and more complex for those who farm on land in the national park as there are more hurdles to jump over before disposing of or changing the use of land. For others it is about sensible IHT tax planning - using life insurance, gifting assets - exactly the same as it is for anyone else impacted by IHT although of course there will be considerable additional mitigations available to farmers not available to the rest of the population. And I'd have a great deal more sympathy for them as a whole if they hadn't been largely pro Brexit - the economic damage by that decision has to be paid for and I fail to see why they should be exempt from the consequences.

 

[Harry Wilson's tackle]

You seem to be very angry and confrontational lately, often closer to fishing and baiting arguments than I recognise from your older posts. Just saying...

I was much worse 20 years ago.

Anyway, I am not remotely angry. I am raising an eyebrow at the gormless entitlement I am hearing on the radio.

"I am going to have to talk to my accountant now" was a recent comment on the phone in. Shocking scenes.

Look, nobody like change. But hiring a bus to drive to parliament is a bit entitled in my view. And apparently farmers did used to pay inheritance tax, till Thatcher made them exempt in the 1980s. Ooo arr, that be your Maggie.

And there is a national radio phone in on it, so..... if I'm fishing I seem to have caught another tiddler.

 

[Weststander]

Average age of a farmer in this country is 59, 33% are over 65. Most work every day of the year, long hours, most well below minimum wage and many on their own.

Just from my experience when I farmed, I made about £25 profit per pig and £18 per lamb.

There's already a crisis in farming in getting young people to work the land. Those that do inherit the family farm, where margins are so low will now be put under further financial pressure. Easy for these townies to say sell some of your land then not understanding that all the land is needed just to scrape a living.

To suddenly change the rules doesn't leave the average farmer of 59 to plan for the farms future.

At a time when we all should be looking for local sourced food this government is putting a lot of these businesses under huge pressure.

It is without doubt a very damaging policy.

When people on the radio or TV bang on about Clarkson are totally missing the point and also not listening to what he says. He, to many is just a millionaire idiot. He does though highlight the very issue faced by many many farmers. The red tape, how hard it is to make a profit. He can afford it many can't. He actually does far more good in educating people than say Countryfile that views the countryside as honey and milk.

Sorry HWT you are very wrong.

This will pan out over time.

Nicky Campbell's phone in, in 5 years time will be the demise of UK farming and a lack of food security from greater imports.

 

[keaton]

Why don't we go 'full' Stalin?

You've been backing Tory and Brexit for years it's a bit late to start caring about British farmers now

 

[Weststander]

I do understand that its not easy to suddenly pay an IHT bill if your wealth is all tied up in land that is by definition hard to get at. That poses an issue for some older farmers when the new rules come in and possibly needs further thought by the govt. I know a couple a farmers and its a reasonable concern, and more complex for those who farm on land in the national park as there are more hurdles to jump over before disposing of or changing the use of land. For others it is about sensible IHT tax planning - using life insurance, gifting assets - exactly the same as it is for anyone else impacted by IHT although of course there will be considerable additional mitigations available to farmers not available to the rest of the population. And I'd have a great deal more sympathy for them as a whole if they hadn't been largely pro Brexit - the economic damage by that decision has to be paid for and I fail to see why they should be exempt from the consequences.

That's a spite aspect. And many farmers were pro EU.

 

[Bold Seagull]

Please detail these mitigations you speak of.

If your family are working and stand to take over the farm, pass on assets to them as they progress while you're alive. Consider whether an LLP or Ltd is a better model over sole trader for the farm business model. If you get to live into old age, then you've not given any assets to your children for working the farm their entire lives??

 

[Eeyore]

In the same way most people can pass on £1m tax free before IHT, Farmers have special dispensation whereby they can pass on £3M before tax. And, on the remainder, instead of paying 40% tax, they have a special dispensation whereby they only pay 20% tax. So, on £5M it would be approx £400,000 which due to the further special dispensation to pay over 10 years, ends up at c40K pa, before their accountants get hold of it.

My kids, in a similar situation, but me not being a farmer would have to pay £1.6M immediately

If you pass your house and capital on to the kids, they may have to pay inheritance tax. The difference is that the house is a liquid asset.

If I'm a farmer's son, working that farm, and I inherit it, I do not have a liquid asset if I wish to maintain the business. Thus I could be landed a bill of £1m with no loose capital to pay it. The only choice I may have would be to sell the farm.

I'm not saying their shouldn't be a levy, I'm just saying this needs to be thought through. The farmer's have a point.

 

[Kinky Gerbil]

Government say 20percent of farmers will be affect NFU say about 60 percent, I am sure the truth is somewhere in between

Reed and Starmer said pre election there would be no tax rise or change, so I get why the Farmers would be upset

 

[Triggaaar]

Somewhat depends if you want food on your table. A farm is a business and if farmers estates are forced to sell them to pay IHT then they will be either snapped up by big corporate farm businesses who care little about the environment & animal welfare and more about profits. Or the farms will get built on meaning having to import even more food and supermarket prices will go up.

But all the owners have to do is give their farms to their kids and the tax is avoided

 

[Harry Wilson's tackle]

Clearly Harry you don't have any farmers in your family. I do and I can assure you it's not an easy existence - they get a pittance in 'profit' and their pay is far less than some townie medical lecturer with a gold plated pension

I think they are entitled to engage with this, of course, but there is a strong whiff of entitlement from some of them.

Yes I have a good pension but if I wanted to pass on a million pound property (I don't have a million pound property, by the way) I would be clobbered in tax. What the farmers are being asked to pay is a fraction of that.

I simply can't see London's finest flocking to support these people today when they rock up to protest. It is about proportion and perspective. If there is grievance then negotiate.

(and before I'm accused of some sort of left wing nonsense, I was deeply mocking of my own (former) union when some of the picket line stood grinning with Jeremy Corbyn a couple of years ago. A total moment)