Thousands of farmers demonstrated in central London on Tuesday to protest against changes to agricultural property relief…reports Asian Lite News
The environment secretary has promised to reform the food system to ensure farmers are paid fairly for the food they produce, after many filled the streets of Westminster to campaign against inheritance tax changes.
Speaking at the Country Land and Business Association (CLA) conference, Steve Reed said: “I heard the anguish of the countryside on the streets of London earlier this week. We may not agree over the inheritance tax changes, but this government is determined to listen to rural Britain and end its long decline.”
Reed added he was going to No 10 to tell Starmer about the gulf between the rural and urban communities, which he said needed to be bridged urgently. CLA figures show the rural economy is 16% less productive than the national average.
Thousands of farmers demonstrated in central London on Tuesday to protest against changes to agricultural property relief, which mean farms worth more than £1m that are passed on to the family when the owner dies will have to pay a 20% tax on the remainder of the value.
But many, including the president of the National Farmers’ Union, Tom Bradshaw, said this change was the “final straw” after decades of neglect. After many years of being squeezed by supermarkets to the point where farmers receive just 1p for every loaf of bread or block of cheese sold, and seeing their subsidies disappear after Brexit, farmers are desperate, he said. Incomes have plummeted as extreme weather hits yields, and now farmers also fear being unable to pass on a viable business to descendants.
To address this, Reed announced the government would consult on a new 25-year farming roadmap and said he would make changes to the supply chain to ensure farmers got a fair price for their produce. “I’m not prepared to let so many farmers keep working so hard for so little,” he said.
Of the roadmap, he added: “This will be the most forward-looking plan for farming in our country’s history, with a focus on making farming and food production more profitable in the decades to come.”
Reed said the plan would be about “supply chain fairness”, meaning farmers would be paid fairly by those to whom they sell produce.
Reed said: “Across the whole supply chain, the producers, the farmers, the growers, get relatively little of the money that a product is sold for. And if there’s ever a problem in the supply chain – let’s say a contract is agreed and then energy prices shoot up – it’s quite often the producer or the farmer that has to bear the cost of that, and sometimes they end up selling their produce below the cost of producing it, and that’s not sustainable.”
Speaking at the conference, the president of the CLA, Victoria Vyvyan, accused the government of “taxing us out of existence” and embroiling rural people in a “stupid row about numbers”.
She said she felt she had been “marginalised and condescended to, told to calm down” and that farmers were “fearful of losing everything that they’ve worked for, borrowed for and hoped for”.
Reed said he hopes his plan would regain the countryside’s confidence, adding: “This isn’t just about one thing. It is something much wider, and we have basically a proportion of rural Britain out on the streets of London telling us, telling politicians and politics, that they feel ignored, alienated and disrespected, and that’s what they want to change … I think it’s not just about a single tax issue. It’s much, much, much bigger than that.”
Farmers aged 80 and above could get tax breather
New inheritance tax rules for farmers could be changed to make it easier for those 80 and over to hand down their farm without it incurring the tax, in what would be a partial climbdown by the government after a bruising row with farmers and a huge protest march in Westminster on Tuesday.
The Treasury is understood to be assessing the impact of changes, including amending gifting rules for over-80s so they can pass on their farm to their family without having to live for seven years after making the gift.
Officials are also understood to be assessing the impact of changes announced in the budget in October on active small- and medium-sized farms compared with smallholdings.
Labour has come under attack after Rachel Reeves announced in her budget last month that farmers who have a business worth more than £1m could be subject to 20% inheritance tax (IHT). Labour government had previously promised that no changes would be made to agricultural property relief (APR), which granted farmers an exemption from inheritance tax.
Farmers met the Treasury on Thursday and proposed that older farmers should be exempt from gifting rules which, under the plans laid out last month, would mean that if they died less than seven years after handing the family farm down to their relatives, they would have to pay a tax that farmers say could wipe their business out.
Labour has tried to target the policy at wealthy investors buying land to avoid IHT, who have been blamed for driving up land prices. However, many farmers complain that while they may be asset rich, they are cash poor, because farm incomes have plummeted because of cost inflation, poor harvests and fierce competition among retailers. They say many farmers take home less than the minimum wage.
Many farmers also point out that they have not paid into a private pension as they intend to live in the farmhouse and take an income from the farm – which they cannot do if they gift it to their children.
Treasury sources said the impact of changing gifting rules for those aged 80 and over was being examined, but added that the impact was difficult to determine as data on the farming population has generally put all those over 65 into one bracket.
Tom Bradshaw, president of the National Farmers’ Union, said this change would not go far enough: “The average age of death in the UK is around 80, so they should bring it down to 73 to allow them to use the seven-year gifting rule.
“If they are looking at how they create an exemption for the elderly members of the industry then the exemption should come in seven years before the average age of death. I would prefer an exemption before April 2026, when the rules come in, so you can make the transfer and don’t have to survive the seven years, but we have far better options on the table if they come out for consultation. We could come up with a policy that would answer the questions but be far better for the industry.”
Farmers have also argued that non-farmers are being treated generously, as people who have a country home and a paddock can currently claim APR as their asset is worth under £1m whereas those with a middle-sized farm are caught by the new tax.
Treasury sources confirmed that the impact of changes on active small- and medium-sized farms compared with smallholdings was also being assessed. This is because under the current regime people who buy a countryside home and do hobby farming avoid paying inheritance tax on their estates but many productive small-and medium-sized farms will be subject to the tax, as farming on small pieces of land is often unviable and productive farms need expensive machinery to function, which will now be caught under the new inheritance tax regime. The inheritance tax threshold for households which do not qualify for APR is £325,000.
Inheritance tax is normally charged at 40%. Labour has said farms worth £3m could end up being exempt because married couples are able to claim £1m each tax-free as well as a family home worth up to £1m.
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