The head of the National Farmers’ Union (NFU) has said farmers are ready to take “militant” action after meeting the government to urge a U-turn on planned changes to inheritance tax.
NFU President Tom Bradshaw said he had never seen “the weight of support, the strength of feeling and anger” over the plans to impose inheritance tax on farms worth more than £1 million, which farmers have said could spell the end for family farming in the UK.
Under plans announced in last week’s Budget, agricultural property relief (APR) will be scrapped, so tax will be levied at 20 percent on farms worth more than £1 million. Farmers have said it will force their families to sell off the land they inherit in order to settle the tax bill.
Treasury Claims Disputed
Defending the policy over the weekend, Chancellor Rachel Reeves said that in some cases the threshold could in practice be about £3 million.But speaking on Monday after a meeting with Environment Secretary Steve Reed and Exchequer Secretary to the Treasury James Murray, Bradshaw challenged the claim that only a minority of farms would be subject to the tax.
He told the PA news agency: “Obviously, we fully dispute the figures the Treasury has been using and we’ve played back DEFRA’s [Department for the Environment, Food and Rural Affairs] own figures.
“So, the Treasury is saying only 27 percent of farms will be within scope of these changes, DEFRA’s own figures suggest that two-thirds of farms will be in scope.
“How they can have that wide a discrepancy within government is quite unbelievable.”
He said there had been no resolution on the issue, adding: “We’ve made very passionately our perception clear, that this tax change is completely unfair.
“It had been ruled out by the secretary of state in the run-up to the election and now there are many family farms right across the United Kingdom that are worried for their future.”
People commonly avoid inheritance tax through a transfer of assets to the next generation, but this must be done at least seven years before death.
Bradshaw said he had spoken to farmers in their middle age who have been running successful businesses, but whose parents were still in the family house and remain partners in the business and who may not live for another seven years.
He said: “We will continue to try and work with the government to get to a resolution but something has to change.
“I have never seen the weight of support, the strength of feeling and anger that there is in this industry today. Many of them want to be militant.”
He did not elaborate on what “militant” action might look like, but in online forums, farmers have been discussing a “sewage strike” where they could potentially stop taking sludge from water companies to use as fertilizer.
Although farming does not have a history of widespread strike action in the UK, farmers have taken part in organised protests, such as in 2013, when they lobbied against proposed changes to EU agricultural subsidies and the Common Agricultural Policy.
Reeves told the BBC’s “Sunday With Laura Kuenssberg” on Nov. 3: “Only a very small number of agricultural properties will be affected, but last year the benefits of agricultural property relief, 40 percent of the benefit was felt by 7 percent of the wealthiest land owners.
Asset Rich, Cash Poor
The NUF said that many family farms have a high notional asset value, but very low income and liquidity, which means that the vast majority of owners would be unable to meet the inheritance tax charges without selling assets.Following the meeting, the government continued to insist the vast majority of farmers will still be able to pass on the family farm to their children.
Speaking in a House of Commons debate on Monday afternoon, minister for food security and rural affairs Daniel Zeichner referred again to a “£22 billion black hole” which Labour says the previous Conservative government left in the public finances.
He said: “We completely understand farmers’ anxieties about the changes, but rural communities need a better NHS, affordable housing, and public transport, and we can provide that if we make the system fairer.
“The reforms [to APR] mean that farmers can access 100 percent relief for the first £1 million and 50 percent relief thereafter—an effective 20 percent tax rate. That means that an individual can pass up to £2 million, and a couple up to £3 million between them, to a direct descendant, inheritance tax-free.”
The government has said that a small number of wealthy landowners who are not actually farmers, but who register as having a farming business, have been using APR to avoid paying inheritance tax.
Cross-Party Opposition
The Liberal Democrat MP Alistair Carmichael, who chairs the Select Committee on Rural Affairs, said that every farming business is “capital-rich but revenue-poor” and that farming has always been more heavily influenced by government intervention than any other industry.“Agricultural property relief is not a loophole; it has been a deliberate policy of successive governments for the past 40 years, designed to avoid the sale and break-up of family farms,” he said.
Former Tory minister Kevin Hollinrake branded the policy ideologically driven and “warped.”
He told MPs: “The only transition [farmers] can see is transition from family farms to the state. Does he realise that the farming industry is one of the least profitable sectors in the country?
Farmers ‘Considering Committing Suicide’
Reform UK leader Richard Tice raised the prospect of farmers taking their own lives because of the change, asking: “Are the minister, the secretary of state, and the chancellor aware that so serious are the consequences of this policy that the heads of farming families in their 80s and 90s are seriously considering committing suicide before it comes into place?”Ann Davies, an MP for Welsh nationalist party Plaid Cymru and a tenant dairy farmer, accused the government of trying “to portray farming as an industry of super-wealthy landowners,” which she said is “simply not the case in Wales.”
“Welsh upland farmers in mountainous and hilly areas have an average annual income of £18,600—yes, you heard correctly: £18,600. That is far below the national living wage for hours that are way beyond the average 40-hour week,” she said.
But Zeichner said the likely outcome of the change will be that, “People will put arrangements in place to pass on their farms at the appropriate time, pulling more younger people into farming, which will be a good thing.”
