crossorigin="anonymous"> Inheritance Tax: How much will farmers actually pocket? – Subrang Safar: Your Journey Through Colors, Fashion, and Lifestyle

Inheritance Tax: How much will farmers actually pocket?


Farmer The government’s proposals to include agricultural land in inheritance tax are taking to the streets of Westminster once again.

In the weeks following Chancellor Rachel Reeves’ budget announcementFarmers and their representatives are lobbying hard to reverse the decision.

Last month, about 13,000 farmers and supporters rallied outside parliament – on Wednesday, about 500 farmers. They are expected to return to Westminster with their tractors..

The government wants farmers to pay taxes. At a new rate of 20 per cent on assets over £1m – less than the 40 per cent most others will pay. Yet before the budget, they paid nothing on land under agricultural property relief without limits.

For updates on today’s protests in Westminster – click here to view our live blog.

A farmer with his tractor arrives at Westminster ahead of a second protest on December 11.

A farmer with his tractor arrives at Westminster ahead of a second protest on December 11. (Reuters)

The allowance comes on top of the £500,000 a typical home owner gets if they leave their home to their children or grandchildren, so a married couple can shelter up to £3m from HMRC, the amount Will exclude most forms.

The NFU says the change, which will come into force in April 2026, will force many farmers to sell their family farms to pay the tax bill. It claims that the change was pushed without consulting the farming community.

Groups including the Liberal Democrats have suggested that 70,000 farms could be targeted, although this figure assumes a £1m limit for tax-free inheritances rather than £3m.

The government claims the biggest 500 farm estates in the UK will pay the tax each year, with smaller farms “not affected” and independent. Analysis by Dan NedelA tax expert, suggests at least 100 are caught each year.

But inheritance tax is incredibly unpopular, and farmers who have staff will also have to put up with higher National Insurance bills for employers, as Ms Reeves wants to reduce the threshold at which it is paid. .

“They’re pretty angry,” says Sam Davis, a tax partner whose clients include HW Fisher Farmers.

And the math favors married couples, which many say is unfair. In fact, getting married on an average farm makes all the difference.

Tractors are being driven from Westminster in protest.

Tractors are being driven from Westminster in protest. (Ui Mok/PA Wire)

According to estate agent Carter JonasThe average arable land value is £9,667 per acre, while pasture is at £7,833.

According to official figures, the average English farm size in 2023 was 87.9 hectares or 217 acres. For a mixed farm of half arable and half pasture, this puts the average size farm worth £1.9m for the land, excluding buildings and equipment, putting it under the threshold for a couple.

But, for a farmer who has divorced or never married, more than £400,000 will be out of the free allowance, costing their heirs £80,000.

As farm buildings and equipment will be above that £1.9m, the tax bill will be higher for the average sole farmer, and although they have 10 years to pay their inheritance tax bill , some land may be sold

Mr Davies says there are ways to pay.

The easiest is to give to the business. Tax-conscious working farmers can gift their farms to their offspring – or whoever they choose – and pay no taxes as long as they live another seven years.

In practice, this means going out of business, which some may find difficult.

“To the extent that they’re still working on it, they still want to be able to make all the decisions and call the shots, and once they give things up, it’s very difficult to do that. Because it’s not your thing anymore,” says Mr. Davis.

The feeling that you need to be married or able to accurately predict your own death to avoid taxes is probably the biggest source of unhappiness for many farmers, even if they are not taxed. Stuck, they say, because these situations seem irrelevant. For cultivation or justice.

“The people most likely to be affected, which is perhaps the saddest thing about the new laws, would be someone who, say, is unmarried and dies at age 50, that Before they get a chance to go through everything while they’re still there, they’re very actively working on the farm.”

Farmers insist the inheritance tax changes must be rolled back.

Farmers insist the inheritance tax changes must be rolled back. (P.A)

Another option for farmers is to put the farm into a trust, although this costs money and is still liable for tax, albeit regularly rather than paying a balloon on death.

But there may be a silver lining for family farmers in other ways.

In 2018, Farmers’ Weekly reported that buyers other than farmers outnumbered farmers in purchasing farmland for the first time.

Now, according to data from Sturt & Parker, farmers accounted for just 31 percent of land sales in the first nine months of this year, down from 68 percent in 2008.

Investors, the wealthy and so-called lifestyle buyers who want land for leisure, have been pushing farmers out and driving up land prices for some time. If the advantage of avoiding inheritance tax is lost, they are less inclined to buy land at a reduced price.

Cheaper land is good news for farmers expanding their businesses and also means it’s harder to break the £1.5m or £3m barrier.

Mr Davies says if the government wants to collect taxes from the wealthy who are using farmland for tax evasion and protect working farmers, it can go ahead with its plan. but can only tax sales.

“I think in general, that element of policy [taxing investors not farmers] It’s not something people worry about.”

Thus, working farmers can move on without paying the tax, while those who hope to sell will only have to pay when the sale is complete and they have the money to do so.

NFU president Tom Bradshaw told the BBC he and his members were ready to work with the government to stop the wealthy from using land ownership to avoid tax.

He said: “This policy is ill-conceived. There is still a 20 per cent benefit for the uber-wealthy to invest in agricultural land, and the changes they have made to pensions have now put people out of pensions. Land has been encouraged to extract and invest up to £1m.”



Source link

Leave a Reply

Translate »