While I generally think the recent UK Budget was perfectly reasonable, one aspect I'm not so sure about is abolishing tax relief for British farmers...
Before the budget British farms had 100% tax relief, meaning one generation could pass on the family farm to the next with no inheritance tax, keeping farming the family.
However now tax relief stands at only £1 million per person, so £2 million for a couple, excluding the value of the house.
NB farm houses can be expensive, A £1M valuation isn't unusual, but while a total IHT relief of £3M may sound like a lot by normies standards, it's NOT a lot in terms of a farm business.
One Acre of farmland can go for > £10K in some parts of the UK and some farm machinary can easily cost 6 figures (tractors!) so this means that pretty much any farm over 200 acres is likely to fall foul of inheritance tax.
And 200 acres isn't exactly a lot of farm, certainly not when it comes to animal farming, certainly not when a good portion of your land may well be flooded for part of the year!
Consequences...
British newspapers seem to be condemning this increase in inheritance tax for farmers universally, and TBH I'm not surprised.
I mean what's going to happen now is that either the next gen of farmers have to pay a huge tax bill, they get 10 years to pay, but another 20% tax for a decade, that's going to break most farming business models.
Or otherwise it's selling off bits and pieces of land, but unless the farms are ginormous, this would make mid sized farms untenable.
And so they'll probably end up getting sold to large corporations, and I can't see how this is going to help anyone!
Why these taxes...?
I think it's to clamp down on a tax loophole, rich people buy farms, or 'farms' to avoid IHT, that's what Clarkson did, so they can pass on their wealth to their kids - think about it, if your super rich, then buy a farm for £5 million or whatever, run it at cost, no need to make a profit if your income is coming from your other £5M of investments, and that's £5M you can guarantee to pass on to your kids - literally anything you put through your 'business' is tax free in terms of inheritance.
I've no idea how common this is..... I mean this is a handy tax dodge, and maybe there are enough people with enough wealth for this to be a competitive market - literally buying a farm, letting someone else manage it for cost, but it's quite a lot of hassle.
But then again, once we're talking over £1M, you are looking at 40% IHT.
Difficult to strike a balance...
It's a tough one: putting a policy in place to close down a loophole that the tax dodging super rich may use and protecting the rights of genuine farmers...
But at the end of the day I'm not about to get my violin out for a brother and sister caught in a dilemma of having to find a few hundred grand to pay a tax bill having inherited a farm valued at over £3M....
Unless the family is extraordinarily large £1M each tax free is still sufficient to set you up for life, and I'm not going to be sad that X specific person can't carry on farming because of this policy, I'd rather see the rich have less IHT loopholes.
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