The NFU has welcomed what it sees as further support for changes to the Government’s proposed new inheritance tax rules following a report by independent research centre CenTax that suggests the reform could be better targeted to protect working farms.
The major changes to agricultural property relief and business property relief announced in the budget and now put forward in the Finance Bill prompted an outcry from the NFU, which dubbed the proposals the “family farm tax”.
The organisation, along with other farming groups and financial commentators, has repeatedly claimed the proposals will not achieve their aim of removing the incentive to shelter wealth in farmland, will damage family farms and will not generate as much revenue as the Government claims.
In a new report (which can be read in full at www.centax.org.uk/news), CenTax has agreed the policy needs changes to deliver the Government’s intentions and has proposed a number of amendments.
Dr Andy Summers, director of the Centre for Analysis of Taxation (CenTax) and associate professor at London School of Economics & Political Science (LSE) said: “Our analysis shows that the Government’s reform largely protects family farms whilst limiting claims by the wealthiest estates. But the relief could be better targeted to reduce its use for tax planning and further extend protection for businesses, including farms.”
NFU President Tom Bradshaw said: “We welcome this detailed report by CenTax which recognises that working farms will be disproportionately affected by this tax. This is not a fair and balanced approach to reform and does little to counter those who seek to shelter wealth from inheritance tax by simply investing in farmland.
“There are interesting adjustments within the report that appear to mitigate the impacts on the most vulnerable in our community and enable farms to invest in the future of food production with greater confidence.
“We think this new independent analysis presents a positive and timely opportunity ahead of the Finance Bill for fresh conversations with government and officials that would allow us all to work together to address issues of fairness and affordability within the proposals. The NFU urges government to grasp this opportunity.”
NFU Regional Board chair for the East of England Alan Clifton-Holt, who farms near Romney Marsh in Kent, said: “This is further evidence from independent tax experts highlighting how the Government’s planned changes to inheritance tax have been seriously miscalculated and do not achieve what they set out to achieve.
“This comes after the Environment, Food and Rural Affairs Committee has concluded the inheritance tax proposals are not fit for purpose, the Office for Budget Responsibility has stated that the Government’s plans leave elderly farmers horribly exposed with no time to make necessary changes to their businesses, and rural business leaders continue to highlight the devastating impact the family farm tax could have on the entire rural economy.
“The Government cannot continue to ignore this independent expert analysis and evidence. It still has time to do the right thing and reconsider its damaging and seriously miscalculated proposals.
“I urge the Government to consider the NFU’s alternative clawback proposal, which is a much fairer system, would raise significant funds for the Treasury, actually tackles the issue of people buying land to avoid tax and does not threaten the future of family farm businesses and the entire rural economy.”
For more like this, sign up for the FREE South East Farmer e-newsletter here and receive all the latest farming news, reviews and insight straight to your inbox.
