Farmer fury as Treasury rebuffs alternative IHT proposals from industry

Farming leaders responded with fury after, after Treasury and Defra ministers refused to look into any form of compromise over the government’s controversial inheritance tax reforms.

Exchequer Secretary James Murray and farming minister Dan Zeichner today met with the NFU, TFA (Tenant Farmers Association), CLA (Country Land and Business Association), CAAV (Central Association of Agricultural Valuers), NFU Cymru, NFU Scotland and the Ulster Farmers’ Union and discuss the changes to agricultural property relief and business property relief announced by Chancellor Rachel Reeves in the Autumn Budget.

The organisations had hoped to be discuss a potential solution that would see IHT levied at the full amount on inherited farms when they are sold, not at a discounted rate when they are handed over to the next generation to keep producing food. The organisations believe the ‘clawback solution’ could ease the burden on farmers, while raising a similar amount for the Treasury as Ms Reeves’ original proposals.

Disappointment

But in a press conference immediately after the meeting, Mr Bradshaw said the meeting had been a ‘disappointment’. “There has been no movement. The government resolutely believe they are correct in the decisions they have made and that they have been generous in the exemptions they are giving us,” he said.

“We are offering them a solution that still raises the funds, but, at the moment, the door is shut from Treasury because they believe they are right. So, the reaction from our members is going to be one of fury, one of real anger and one of desperation that we’ve seen over recent months – and that is what we all feel here today,” he said.L

Later, in a statement, the NFU said the devastating impacts on farming families and the nation’s food security from the family farm tax sit squarely on government’s shoulders. “This morally bankrupt position sits with this government, and, without change, ministers will reap the consequences,” Mr Bradshaw said.

“For the 70 million people living on these islands, food security matters. It matters more given the ever-increasing geopolitical uncertainty. While this is shocking for me to say, the only conclusion I can come to is this government doesn’t care about British food production. Is this the same government which in its manifesto said food security is national security?

“We went into this meeting fully understanding the fiscal hole this government must plug, and we went into this meeting to offer a solution, a solution which has been suggested by other tax experts where the inheritance tax policy is based on a claw back mechanism.

“We also need to be clear, the current talk that the £500 million this generates, which will be raised on the backs of hard-working and hard-pressed farmers, will rescue the NHS is nonsense. This amount will fund the NHS for a day. It’s disingenuous for ministers to repeat this untruth.

He pointed out that the Treasury department has admitted it has not yet carried out impact assessments on its current policy and that the this policy has now been challenged by farming unions and agriculture representatives from across the UK, the independent Office of Budget Responsibility, the Efra Select Committee and tax advisors to the government. Furthermore, every single major food retailer in the UK has also called for change because they can see what this will do to the security of the supply of their products, Mr Bradshaw added.

“This is a mess, but there is still time for Treasury to review. I urge them to look at the proposal put to them by all the major farming organisations today. It will raise the money needed. It is a way forward which is fair, removes the huge risk to British agriculture, including significant emotional and financial pressures, and delivers for UK food security, something the government continues to insist is a priority,” he said.

Ideological

CLA president Victoria Vyvyan described the government’s position as ‘ideological’ and said the meeting was ‘the most unproductive we have ever had’.

“The Treasury was simply going through the motions and showed no interest in farming or family businesses, and the economic damage that they are inflicting,” she said.

“The CLA could not have made the facts clearer to the Treasury: this inheritance tax policy is already inflicting damage on the economy and is likely to end up hitting tax revenues.”

The CLA has argued that the government’s cap could affect 70,000 UK farms, some as small as 100 acres. It will also have a detrimental impact on farm profitability, with an average 350-acre English arable farm owned by a couple needing to spend 99% of their yearly profit over a decade to afford their inheritance tax bill.

NPA comment

NPA chief executive Lizzie Wilson said: “The NPA is hugely disappointed that government ministers and officials are refusing to even look at alternative proposals that could ease much of the pain on the farming.

“The changes announced in the Autumn Budget will cause huge damage to our family farms that form the bedrock of the industry and will make it almost impossible for some to continue as they are. We urge the government to take a step back and at least consider alternatives like that proposed today.”