As I wrote last week, the government’s decision to scrap inheritance tax relief on agricultural property is having political as well as practical impacts. Polling suggests that even most Labour voters think that farms should be able to be passed on without inheritance tax and the National Farmers Union (NFU) has called a mass lobby of MPs on 19 November. If you are an NFU member you can register to take part in that lobby, but the NFU has asked that “if you’re not registered on the event, please don’t travel to London”.
Other demonstrations are being planned by farming organisations and the Alliance will promote them. In the meantime, we have launched an email lobby which will allow people to support the farmers who are going to Westminster on 19 November. Whether you live in city, town or country, it is crucial that your MP understands the enormous impact this change, and others included in the budget, could have on the countryside.
There are essentially three elements to the government’s argument for the changes. Firstly, that people are using the exemption for agricultural property to avoid inheritance tax. Secondly, that that loophole should be closed so that inheritance tax raises more money to support public services. Thirdly, that allowances will mean that family farms are not affected. The issue is not with the first or second part of this analysis. Few would argue that there have not been some people who have seen the purchase of agricultural land as a useful part of their tax planning, or that it is not a legitimate aim to seek to limit that. What is in dispute is whether the allowances that have been put in place really do protect family farms.
As past NFU President Minette Batters has pointed out, many large landowners have set up trusts and the allowances will mean that lifestyle farmers with other incomes and small acreages will remain exempt. It is the family farming businesses in the middle with landholdings between 200 - 800 acres that are precisely targeted by this new tax and which may face being broken up as a result.
Yet from what Labour Ministers are repeatedly saying it is these genuine farming businesses they want to protect. What is required, therefore, is not a policy u-turn but a proposal that would address tax avoidance without destroying family farming businesses. Ministers are not aiming at the wrong target, but I hope it is becoming clear to them that at the moment their sights are mis-aligned. By zeroing in on the real target they would lift a huge weight from many family farms and also extract themselves from what will otherwise become an increasingly tricky political situation.