Farmers across the UK are calling for a meeting with Shadow Chancellor Rachel Reeves to discuss her recent inheritance tax reforms that have sparked significant controversy. Next year this coming April, those changes go into effect. Their stated intention is to raise additional revenue from probate/inheritance tax and address the financial body blows hit on the UK. Farmers are frightened of the destruction that these reforms could cause to family-owned farms.
At a joint press conference earlier this week with U.S. It’s a break from Treasury orthodoxy presumably designed to create breathing space for a thoroughgoing debate over future tax policy. She emphasized that the key focus of the budget would be to “boost productivity and growth and prosperity all across the country.” This announcement comes in the wake of her damaging, controversial, and highly criticized decision last October. Her inclusion of farms and other agricultural property within the inheritance tax rules caused a huge uproar among farming constituencies.
As recently as this month, the Guardian reported that Reeves was already searching for ways to increase inheritance tax revenues. This is all happening as the UK government comes under increasing fiscal strain. In an analysis for the Centre for the Analysis of Taxation (CenTax), independent economist John Whiting found that landowners account for nearly two-thirds (64%) of all farm estates. They only account for 42% of the impacted farm estates. Owner-farmers account for 17% of all farm estates. They represent over a third (37%) of the people impacted by these unfair proposals.
National Farmers’ Union spokesperson Tom Bradshaw took the UK Government to task. He’s concerned that these reforms would have a detrimental effect on working family farms. He stated, “This report gives us an opportunity to sit around the table and try to adjust the recommendations that have been made so far to target them better and remove the worst of the impact from the working family farms.”
Through his comments, Bradshaw painted a grim picture of the next three to six months leading into April. He noted, “I really worry about the period through the autumn and the winter ahead of April, and we’ve got to try to get changes in place that mitigate the impact, but still meet Treasury requirements.”
The proposal would raise critical revenue for public services while closing a loophole currently exploited by wealthy landowners. “Wealthy landowners can afford to pay the tax without having to sell assets, whereas a much greater percentage of family farms will have to sell assets or sell part of the farm to pay the inheritance tax,” Bradshaw explained.
CenTax’s analysis suggests that while Reeves’ plan “largely protects family farms whilst limiting claims by the wealthiest estates,” there remain concerns that these measures may not adequately shield smaller operations from financial distress. Dr. Andy Summers, director of CenTax and associate professor at the London School of Economics, pointed out that “the relief could be better targeted to reduce its use for tax planning and further extend protection for businesses, including farms.”
The Chancellor’s recent meeting with representatives from the National Farmers’ Union highlighted ongoing discussions regarding these issues. It’s hardly surprising that pressure is mounting on the UK’s finances. Farmers and industry stakeholders have been desperately awaiting clarity on how to proceed in the wake of these inheritance tax reforms.