[News] Farmers

[nsclurker]

Nah.

I'd much rather pay a little bit more NI or tax myself, instead of poverty-stricken pensioners being hit hard.

I'd rather the rich and corporations paid a fair amount, TBH. We already do.

 

[Herr Tubthumper]

Your posts seem to indicate you've made your mind up on that, regardless od what anyone else may say.

Anyway, here's two farming protests in central London that happened under Tory governments. There's probably more, but you have the same search tools as me if you are genuinely interested.





I was mulling this whilst walking the dog in the freezing pissing rain, and I came to the same conclusion as @dsr-burnley. As with the Winter Fuel Payments, it feels like a sound policy that has been poorly or lazily implemented such that worthy cases are caught up in it adversely.

I know next to nothing about farming, and knew literally nothing about farm inheritance before Reeves' party piece a few weeks back. I had no idea that farmers had an Inheritance Tax waiver.

But since then, I've listened and read to try and understand the reasoning behind the angst, and there does seem to be some merit. And, as often is the case with these things, the little guy will be impacted the most. The big guy will have access to lawyers and accountants who will help them minimise how they get hit.

From the information I have read yes, I have made my mind up….the same as you seem to have. On balance, I’m in favour of IHT so this Is how I feel. But this situation is more than a simple IHT debate as it addresses an unfair advantage farmers have had for decades and an advantage which has been used as a tax loop hole… closing this loop hole is a good thing. I also disagree that “the little guy will be impacted the most”….the little guy won’t be paying any IHT.

 

[S.T.U cgull]

It's quite a lot more. If you have land plus farmhouse plus barns plus tractors and combine worth £6m, and profit is a good rate of 2% on capital, that would leave the inheriting farmer with an annual profit of £120,000 per year, out of which he would have to pay income tax of £50,000, inheritance tax of £100,000, and use what isn't left to live on. Obviously it can't be done. He will have to sell part or all of the land.

And who will buy it? Certainly not another family farmer. Perhaps a foreigner who doesn't pay IHT, but perhaps someone who will build on it, or cover it with solar panels, or perhaps one of these massive farming companies that is also exempt from IHT. So the question becomes, is it worth the £500m or so income to make that sort of change to the countryside? And to our food supply?

Foreign nationals DO pay Inheritance Tax on UK Situs assets.

This change highlights is the importance for getting the right financial advice. Realistically.. most farms are passed on to the family long before Mum & Dad die.. through gifting the land onward. Trust structures, farming partnerships, level term assurance all feasible ways to plan appropriately.

 

[Herr Tubthumper]

It's quite a lot more. If you have land plus farmhouse plus barns plus tractors and combine worth £6m, and profit is a good rate of 2% on capital, that would leave the inheriting farmer with an annual profit of £120,000 per year, out of which he would have to pay income tax of £50,000, inheritance tax of £100,000, and use what isn't left to live on. Obviously it can't be done. He will have to sell part or all of the land.

This has been discussed a few times before, but what is stopping the farmer switching from a sole trader to a limited company and then using Business Property Relief so no IHT is paid?

 

[dazzer6666]

This has been discussed a few times before, but what is stopping the farmer switching from a sole trader to a limited company and then using Business Property Relief so no IHT is paid?

Don’t think it needs to be a limited company

In Focus: Agricultural & Business Property Relief explained • CLA

CLA expert analysis on Agricultural Property Relief and Business Property Relief and advice on how to claim them

www.cla.org.uk

 

[Herr Tubthumper]

Your posts seem to indicate you've made your mind up on that, regardless od what anyone else may say.

Anyway, here's two farming protests in central London that happened under Tory governments. There's probably more, but you have the same search tools as me if you are genuinely interested.





I was mulling this whilst walking the dog in the freezing pissing rain, and I came to the same conclusion as @dsr-burnley. As with the Winter Fuel Payments, it feels like a sound policy that has been poorly or lazily implemented such that worthy cases are caught up in it adversely.

I know next to nothing about farming, and knew literally nothing about farm inheritance before Reeves' party piece a few weeks back. I had no idea that farmers had an Inheritance Tax waiver.

But since then, I've listened and read to try and understand the reasoning behind the angst, and there does seem to be some merit. And, as often is the case with these things, the little guy will be impacted the most. The big guy will have access to lawyers and accountants who will help them minimise how they get hit.

As I mentioned previously, yes my mind is made up on IHT, I support the principe of it and see no reason/justification why farmers should be treated differently. With this in mind, what is stopping farmers switching to a LTD company and passing the business on using Business Relief and zero IHT as happens elsewhere? As I understand it, BR was set up for the very reason of transferring specific going concerns seamlessly to, amongst others, family. Farms would surely qualify?

 

[BrightonCottager]

Not always, no. But they are quite often allowed to build a bungalow on the farm for an agricultural dwelling for the child or parent (interchangeable) - which they then 'retire' into. (Although they rarely actually retire!) It's virtually impossible for most of us to simply build our own home to retire into for free, after living mortgage free in the main home.

This is a storyline in The Archers at the moment. Tony Archer wants to build a Passivhaus on the family farm to retire into and his 2 irritating children (& possibly a currently absent grandchild) will be grappling with the implications of who moves into the vacated farmhouse. Nobody in the series has yet referred to the IHT issue nor mentioned being on the demo yesterday, even though there are 3 families that I can think of that will be fundamentally challenged by it.

There is another messageboard with a lively debate about the implications of IHT for Ambridge.

 

[beorhthelm]

This has been discussed a few times before, but what is stopping the farmer switching from a sole trader to a limited company and then using Business Property Relief so no IHT is paid?

as i read it business relief is essentially the same rules as agriculture relief, companies and farms are treated the same for IHT.

which begs the question why are small business owners not up in arms about these changes. do they simply use the 7 year rule and not work till they drop? seem farmers making themselves a victim by the archaic tradition of passing on the farm way past when it would be appropriate to do so.

 

[WATFORD zero]

Trusts are complicated and expensive.

Trusts are not complicated or expensive. As has been discussed on NSC many times before, lots of NSCers have them set up and there are nearly half a million set up per year. It's certainly a lot cheaper and simpler than running even a small farm as an ongoing business.

It's very simple. All farmers have to do is plan for inheritance like every other family run business in the UK (and indeed, any family who have assets) in exactly the same way they did before. They haven't always had this tax loophole available to them and even now, the loophole isn't being closed, just tightened a little

 

[Fitzcarraldo]

Think if the farmers want to get the non-farming public onside with this one they probably need more empathetic spokesperson than Jeremy Clarkson who literally said that he bought his farm to avoid paying inheritance tax. I also think it's going to be a struggle to get most people, who will probably only briefly think about this, to convince them that you are poor and can't afford to pay more tax if you own a farm worth £1million plus.

 

[Bozza]

As I mentioned previously, yes my mind is made up on IHT, I support the principe of it and see no reason/justification why farmers should be treated differently. With this in mind, what is stopping farmers switching to a LTD company and passing the business on using Business Relief and zero IHT as happens elsewhere? As I understand it, BR was set up for the very reason of transferring specific going concerns seamlessly to, amongst others, family. Farms would surely qualify?

When I entered the thread, you weren't talking about the specifc IHT policy and neither was I in my responses to you

You seemed to be implying that the farmers weren't really protesting about IHT changes, but it was more a proxy Tory v Labour / right v left protest.

I opened this thread and saw you say:

"From reading this thread it seems farmers have been working every hour god sends for little reward and a pittance in pay all the while supermarkets drive their farmer’s prices down further. They have done this for years/decades with little to no complaint when they certainly had cause to. The minute a Labour government wants to close an unfair IHT tax loop-hole they protest.​

​

Make of this what what you will."​

In response, I posted a list of farmer complaints, going back decades, about supermarkets driving down the prices they pay farmers.

You countered with:

"I am aware of previous farmers gripes and complaints, but I am not aware of a protest of this scale before, with them driving to Downing Street and flooding the media. Even the first two links you posted demonstrate this with “take to Tesco to task” and “complain over supermarkets” etc being as radical as it’s got. Maybe I have missed it but the current protests seems another level entirely. Why now?"​

​

In response, I posted two videos documenting large-scale farmer protests in central London/Downing Street.

You'll note two things:

1. I'm not disputing that this may be a right v left proxy protest. I really have no idea, although when opportunistic grifters like Farage and Badenoch get involved, at the very least it diminishes the validity of the protest.

2. I'm neither siding with the farmers nor the government on the broader policy point.

If I had strong feelings on this policy, my first post on this thread would have happened before yesterday afternoon, and it would have actually been on the main point, instead of merely highlighting to you that you've missed prior farmer complaints and protests.

So, when I said:

"Your posts seem to indicate you've made your mind up on that, regardless od what anyone else may say."​

​

...I was saying: "Your posts seem to indicate you've made your mind up that this is a proxy right v left protest...." I was not saying you've made up your mind on the farmer IHT policy, although you have since confirmed you have.

I'm genuinely dumbfounded you said this:

"From the information I have read yes, I have made my mind up….the same as you seem to have."​

​

...because I've said little-to-nothing on the farmer IHT policy change.

This is the only thing I have said:

"As with the Winter Fuel Payments, it feels like a sound policy that has been poorly or lazily implemented such that worthy cases are caught up in it adversely.​

​

I know next to nothing about farming, and knew literally nothing about farm inheritance before Reeves' party piece a few weeks back. I had no idea that farmers had an Inheritance Tax waiver.​

​

But since then, I've listened and read to try and understand the reasoning behind the angst, and there does seem to be some merit. And, as often is the case with these things, the little guy will be impacted the most. The big guy will have access to lawyers and accountants who will help them minimise how they get hit."​

​

I know little about Inheritance Tax because, unless something completely unexpected happens to me in my twilight years, it's not going to be a concern for me nor my children.

I knew nothing about farmers previously escaping IHT because, why, well would I? I suspect most of the non-farming British public had no idea either.

As above, the policy seems to be broadly sound, and who wouldn't support the targeting of the ultra-wealthy who buy up farmland and/or farms in order to escape paying tax? That's exactly what we should be doing. Do more of this kind of thing, please.

But from all the reading and listening I've done on this subject, I can understand the concern of the smaller farmers who, whilst technically asset-rich - far more so than most people - are also cash-poor, and even though their new IHT burden is preferential in terms of rate and payment terms, it could be very difficult to pay.

Now, I hope all the talk of trusts and limited companies are workable - I have no idea - it's way beyond my paygrade. But if it were that easy...

1. Why the angst in the farming community?
2. If all the farmers took these legitimiate IHT escape routes, this policy would then raise precisely £0. And there's a £22bn blachole that needs filling apparently.

 

[Cordwainer]

My understanding of the issue is now this:
Government in 80s decides to exempt farms/farmers from IHT. As far as I’m aware only the Royals are also exempt? Understandable as they’re so skint of course.
This IHT loophole has motivated the wealthy, devious and tax averse Clarkson types and larger institutions to buy up swathes of farmland much to the detriment of genuine farming communities, farming practices, Uk food production, prices and security.
Now this is being closed a lot of the same types have the temerity to protest about it..after all why should they help share the countries tax burden? So something that was presumably bought in to keep farmers voting the ‘right’ way 40 odd years ago has on the surface been incredibly detrimental to the agricultural sector?

 

[Diablo]

Think if the farmers want to get the non-farming public onside with this one they probably need more empathetic spokesperson than Jeremy Clarkson who literally said that he bought his farm to avoid paying inheritance tax. I also think it's going to be a struggle to get most people, who will probably only briefly think about this, to convince them that you are poor and can't afford to pay more tax if you own a farm worth £1million plus.

Family Farms that have been owned for 60 years + will have been bought for very little. The price of land has rocketed recently (last 5-10 years) this rocketing price of land is bad for genuine farmers who can not afford more land. The rich investors who see the tax advantages and jump on the bandwagon are the problem. Surely the government could cut the IHT relief to non Farmer land owners and leave genuine farmers alone. If this happened I believe land prices would drop to a more affordable level.

 

[Rdodge30]

I think that if you gift a farm in the hope that it is 7 years before you die.. firstly you must pay capital gains tax as if the farm were sold at full value.

If you gift the farmhouse you can no longer live in it or it nullifies the gift - unless you pay rent and your offspring pay tax on that.

By the same token if you gift the farm then you can no longer earn from it other than as an employee or it again nullifies the gift for tax purposes.


I think the whole idea of Ltd company solutions is people confusing ownership of a company with being a director of a company

 

[Springal]

I saw a stat that land valuations for agricultural land was up nearly 300% since 2010 or something - why such a sharp rise in valuations ?

 

[Westdene Seagull]

There’s only 500 farms in the whole country where it’s applicable, so he may be one of the few.

No it isn't - even the government initially said it was around 500 farms PER YEAR affected. It's strange how many people have dropped the 'per year' part. So that means 500 farmers dying each year who's estate may have to sell part or all of the of the farm to pay IHT. Now multiply that up over the next 10 or 20 years - that equals good bye independent family owned farms and hello huge corporates or even more Dysons still buying said farms to pay IHT at 20% rather than 40%. It's a crap policy.

 

[Not Andy Naylor]

At the risk of opening up old wounds, how come farmers are suddenly so exercised about something that may not affect many of them at all, but, in many cases, actively supported Brexit, which was absolutely guaranteed to hurt them financially?

 

[beorhthelm]

I saw a stat that land valuations for agricultural land was up nearly 300% since 2010 or something - why such a sharp rise in valuations ?

that's a mix of fibs (rise not that much) and land being seen as investment beating interest rates return or inflation.

 

[Springal]

At the risk of opening up old wounds, how come farmers are suddenly so exercised about something that may not affect many of them at all, but, in many cases, actively supported Brexit, which was absolutely guaranteed to hurt them financially?

I’d love to see some indication on an average working farm how much worse off they are without subsidies and if that’s been replaced with what

 

[Brian Fantana]

The crux for me is that farmers may be asset rich, simply due to the nature of most farms being relatively large in order to actually achieve the economies of scale/efficiency that running a productive operation probably requires. However. they're not generating (for the most part) an enormous amount of cash off the back of said operation. Take into account that they're a massively important part of food infrastructure in this country and it becomes a very tricky issue to manage.

There needs to be a split between farm land that is genuinely being used for the correct purpose versus that which has been purchase by the super-rich and taken out of production, as it were.

Simply using the value of the land assets here is not the best measure, IMO. It is not like the equivalent of someone owning a massive residential or commercial property portfolio, which has both increased massively in market value over the last couple of decades but has ALSO produced enormous rental returns on top.

I have no skin in the game here but I can absolutely see why genuine farmers have a real concern about this policy and I really think the government needs to look at it again in a bit more detail, accounting for some of the nuances raised.