presumably he can’t receive any income from it, or even live rent free in any house that’s part of the farm
Then... the farm is passed on without the "retirement" house. On death, that remaining house, if worth enough, gets taxed just like your home would be, if worth enough. I don't see a problem. Land worth many millions can change hands within the family, without inheritance tax. If the remaining home gets hits with inheritance tax, because it's worth lots... that's exactly how wealth taxes operate... and unless as a country we start to embrace wealth taxes, our upstairs downstairs cap doffing mentality will never be done away with.
I'm rather stunned by what I'm reading on this thread.
UK farming isn't green? Compared to what? Transporting your milk from across the continent? Flying your beef in from Brazil or lamb from New Zealand?
What's the high land value based on? Some developer whacking a load of shite quality houses on the land.
Why should farmers get preferential IHT rules? Precisely because it's not a 'normal' business, the land value does not directly reflect the productivity of the farm.
As for that list of dukes over the page, well this probably won't affect them, because they'll have top drawer accountants already putting the farms into trusts or whatever schemes to ensure they don't pay a penny.
The people it will really hurt are the small to mid size family farms where the land is passed down generation to generation and to whom the value of the land is really irrelevant anyway.
"Is it too soon yet for the IHT announcement to start impacting land prices?"
Not if it's a genuine thing, as opposed to a nothingburger whipped up by a few well-connected rabble rousers.
What’s the high land value based on? Some developer whacking a load of shite quality houses on the land.
Nope, most farmland cant be built on. That which can will have far higher land value and as a hint those keen custodians of the countryside and believers in handing down generation upon generation would have flogged it in that case.
Why should farmers get preferential IHT rules? Precisely because it’s not a ‘normal’ business, the land value does not directly reflect the productivity of the farm.
And now we get into the circular argument. The land prices have increased since the Dysons and Clarksons of this world use it as a way of not paying inheritance tax. If the prices do not reflect the land productivity then something external is skewing those prices.
The people it will really hurt are the small to mid size family farms where the land is passed down generation to generation and to whom the value of the land is really irrelevant anyway.
Well they managed before this exemption was put in so why not now? Also most if not all of those farms wouldnt be impacted.
What’s the high land value based on?
What's the high value of homes based on?
The value of land, of all forms, has gone up, and up.
If you owned lots of houses 40 years ago, your wealth is now vastly higher.
If you owned lots of land 40 years ago, your wealth is now vastly higher.
That increase in wealth, for the wealthiest, is fair game for taxation. Why shouldn't it be?
Only own a modest house, or a small farm... there are tax breaks still there to protect you.
Sort of reverting back to the far right thing raised by the OP. My facebook feed this morning was flooded by posts from "aggressively patriotic" groups supporting the farmers. The levels to which this stuff is being manipulated by others (in this case the wealthy i suspect) is staggering.
Well they managed before this exemption was put in so why not now? Also most if not all of those farms wouldnt be impacted.
I suspect that they may view the impact differently.
They may not have paid inheritance tax, but won't want to see their assets (however illiquid) fall in value.
A bit like house prices. Everyone agrees there's a crisis when it comes to housing and want more affordable prices for their kids etc. But they don't want it locally because that would push down the value of their house....
dissonance
Nope, most farmland cant be built on. That which can will have far higher land value and as a hint those keen custodians of the countryside and believers in handing down generation upon generation would have flogged it in that case.
Much of it can, and people are betting that more can in the future.
And now we get into the circular argument. The land prices have increased since the Dysons and Clarksons of this world use it as a way of not paying inheritance tax. If the prices do not reflect the land productivity then something external is skewing those prices.
Yeah so find a way to hit those people, not family farmers with a middling sized farm. Raising/tapering the threshold for example.
Well they managed before this exemption was put in so why not now? Also most if not all of those farms wouldn't be impacted.
Go and look at land values over time, machinery costs etc compared to farm earnings and you will see why this was not an issue.
But it's not just that it's being changed, it's also the fact it's being changed at very short notice (much like the private school VAT fees thing being introduced in the middle of a school year).
from jealousy and bitterness that how dare someone have something that i dont
I think it’s more how dare they not pay something I have to. Albeit that most estates do not attract IHT, and nor will most farms. IHT is a rounding error in UK finances, but an emotive one, clearly
Since 2004, the price of farmland has increased from £5k per hectare to £23k per hectare. That’s 8% per annum with declining prices from 2015-2022 factored in! The price rise is not from farming. Perhaps a reset will help farmers farm land.
BTW average house prices have increased by 3.8% per annum in England over the same 20-year period. So half the rate of farmland. Clearly demand for farmland has outstripped supply, and one should ask why that might be the case.
UK farming isn’t green? Compared to what? Transporting your milk from across the continent? Flying your beef in from Brazil or lamb from New Zealand?
Compared to how it was before the big agribusinesses took over and started ripping up hedgerows, filling the ground with chemicals and the cows with unnecessary antibiotics. The farms aren't some sort of rural idyll with chickens pecking about in the yard, there are thousands of them in massive sheds.
andrewh
Free Member
UK farming isn’t green? Compared to what? Transporting your milk from across the continent? Flying your beef in from Brazil or lamb from New Zealand?
Compared to how it was before the big agribusinesses took over and started ripping up hedgerows, filling the ground with chemicals and the cows with unnecessary antibiotics. The farms aren’t some sort of rural idyll with chickens pecking about in the yard, there are thousands of them in massive sheds.
And this inheritance tax change fixes that how exactly? In fact i bet this tax change causes family farmers to sell up and actually increase the amount of land that's in the hands of "big agribusinesses".
Nothing to do with the IHT debate at all, just pointing out that farming used to be much more environmentally sustainable.
It's weird how 'conventional farming' is now seen as the norm and 'organic farming' is the unusual way of doing it, when did that change? What's 'conventional' about changing the way we've grown food for thousands of years over the course of a generation or two? The quality of the food has not improved, the environment hasn't, animal welfare hasn't. Quantity, and the money made from it, have increased. Is that a better way of doing it?
The people it will really hurt are the small to mid size family farms where the land is passed down generation to generation and to whom the value of the land is really irrelevant anyway.
Then organise it into 'business' and 'personal' rather than trying to mix the two - just like the rest of us do when we've businesses.
The reason they haven't is that it's been more tax advantageous to not - and now it isn't.
Grow up and be adults.
The people it will really hurt are the small to mid size family farms where the land is passed down generation to generation and to whom the value of the land is really irrelevant anyway.
But it wont. There is no iht in reality til £3m in assets as myself and others have already pointed out. Even then a little bit of financial and tax planning makes that disappear if your estate is worth more then £3m
intheborders
The people it will really hurt are the small to mid size family farms where the land is passed down generation to generation and to whom the value of the land is really irrelevant anyway.
Then organise it into ‘business’ and ‘personal’ rather than trying to mix the two – just like the rest of us do when we’ve businesses.The reason they haven’t is that it’s been more tax advantageous to not – and now it isn’t.
Grow up and be adults.
No need for the patronising tone. The point is that it has literally not even been a consideration for a family farm, suddenly, now it is.
Something like 40% of farmers are over 65, it's a real problem to introduce this with a short deadline.
Slight tangent but I wonder if the powers that be are doing some red diesel checks in and around London today 🙂
And this inheritance tax change fixes that how exactly?
Well it would be nice if some of the money raised would go back into helping those farmers who want to do their bit to improve the ecology of their farms. They do exist.
I think it’s more why don’t they pay something I have to? And yet to see any valid reason other than guardians of the countryside.
becuase you're not trying to pass on a business, a very complex one at that to people who don't earn that much money compared to someone on payee. We're not comapring apples and apples, its apples and giraffes.
becuase you’re not trying to pass on a business, a very complex one at that to people who don’t earn that much money compared to someone on payee.
I have a sideline business with a lot of capital tied up in it which will be subject to inheritance tax and i’d like to pass to my nephew and nieces. It doesn’t generate masses of profit but it ticks by. It’s not complex but so what. Apples and apples here.
Good discussion lads
Lots of good/interesting points made from different angles.
STW at its best
The people it will really hurt are the small to mid size family farms where the land is passed down generation to generation and to whom the value of the land is really irrelevant anyway.
How many small-medium size farms are worth over £1.3m though (assuming there's a farmhouse on it, rising to £3m allowance inc. spousal etc.)? The BBC Verify article says only 35% of UK farms are valued at over £1m, I'd assume then they're mostly medium-large farms (and likely just large farms once you get to £3m).
There's probably only a handful of genuine family-owned-passed-down-through-the-generations farms that will really struggle with the IHT change (e.g. worth £1.5m with no spousal allowance to factor in but so cash poor that paying back £35k over 10 years would be impossible). Perhaps there is a way to help those family farms without providing a loop hole the wealthy landowners can't exploit (not sure what that would be though) but I hope the government don't just cave completely and not implement the main IHT changes.
It seems like there are 2 problems. First, the value of the land is too high. I don't know much about this, but some of the explanations above make sense. If someone can make significant money and/or savings by buying the land, whether or not it is worked then it pushes the cost up for everyone.
The other issue is that it seems to be pretty hard to make money from farming - as opposed to owning farmland. Supermarket practices must be a huge component in this. This source suggests the value of supermarkets in the UK economy is 241 billion, while this link says UK farming contributed 13.7 billion to the economy last year. Perhaps farmers (and we, the customers) could push harder for reform there? I'm not sure if these figures are directly comparable, but it shows where the balance of power lies.
UK farming isn’t green? Compared to what? Transporting your milk from across the continent? Flying your beef in from Brazil or lamb from New Zealand?
Loads of studies show that sea transport of food is usually a fairly minor component in the environmental impact of food production. Rearing sheep in New Zealand is much less energy intensive than in the UK so it is more "environmentally friendly" to import the meat. Beef from slash and burn rainforests in Brazil less so, I'd imagine.
Milk is interesting - UK has the potential to produce relatively low-impact milk, but there are limitations on how much we can use. Exporting seems to be pretty big business - so we should not be critical of "food miles" and insist on insular self-reliance. The best way to get the most value out of food production is to capitalise on what we can do best and rely on trading partners to do the same.
I know there's a section of society always very excited about the prospect of re-living WW2 and needing to be self-sufficient, but it's not going to happen.
Since a lot of the anti- IHT change voices in the media are concerned about the loss of food production capacity, I thought I'd look at the degree to which we are self-sufficient and how it has changed over time.
It rises steadily post-war (when we were nowhere near self sufficiency) until the mid 80s, when it starts to decline, right about the time the IHT exemption was first introduced incidentally.
Again, in relation to the far right...
Outdoorsy clothes have been doing well.
Also, unfortunate banner under Tice...
The other issue is that it seems to be pretty hard to make money from farming – as opposed to owning farmland.
This is the bit I don't understand?
How do you make money from farmland without farming it?
The vast majority will never get planning permission for any kind of development, although are the returns so great that if you buy up 1000 acres and only get housing planning for 10 acres, does it pay off?
It rises steadily post-war (when we were nowhere near self sufficiency) until the mid 80s, when it starts to decline, right about the time the IHT exemption was first introduced incidentally.
And incidentally when a greater choice of food across the seasons really started to be available (to ordinary folk).
FuzzyWuzzy
How many small-medium size farms are worth over £1.3m though (assuming there’s a farmhouse on it, rising to £3m allowance inc. spousal etc.)? The BBC Verify article says only 35% of UK farms are valued at over £1m, I’d assume then they’re mostly medium-large farms (and likely just large farms once you get to £3m).
I'm dubious of that figure from the BBC. In a lot of the country, the farmhouse alone is probably £500K, and I bet a lot are closer to a million. Then there is equipment (tractor alone can be £100K plus drills sprayers etc), working buildings, livestock + the land itself at £10K an acre (average farm size 217 acres). You can be over 1.3 million very easily.
For reference, Harry Metcalf breaks down the figures on his own farm (500 acres) in a recent video on his farm channel and reckons it'd be worth close to 8 million. He says you'd need around that size of farm to bring in around £60K a year.
It’s really tugging on my heartstrings listening to a multimillionaire TV presenter imploring the government to allow landowners sat on millions of pounds worth of assets to pass them on to their children without paying any tax.
Apparently Andrew Lloyd Webber was there too as he was also caught up in dodging tax by buying loads of land
Will nobody think of the multimillionaire musical writers?
How many small-medium size farms are worth over £1.3m though (assuming there’s a farmhouse on it, rising to £3m allowance inc. spousal etc.)? The BBC Verify article says only 35% of UK farms are valued at over £1m, I’d assume then they’re mostly medium-large farms (and likely just large farms once you get to £3m).
The HMRC source for the article says 27% of inherited farms in 2021-2 were above £1m, but the vast majority would still be below the threshold once the various other reliefs are applied. Only 117 out of 1730 (7%) were above £2.5m. There are nearly 100,000 farms in the UK all together.
On the profits of farming - it looks like a huge proportion are making less than 25k Euros a year.
(this is just England)
The vast majority will never get planning permission for any kind of development, although are the returns so great that if you buy up 1000 acres and only get housing planning for 10 acres, does it pay off?
1acre plot near us sold for £900k a fair few years ago, fag packet maths says yes to your question. Looked on the private eye map of land held by offshore companies - most of the "farm land" near us is offshore owned & being infilled with housing developments slowly but surely.
How do you make money from farmland without farming it?
Buy land. Rent land to someone else who makes a pittance on it while taking all the risk.
For reference, Harry Metcalf breaks down the figures on his own farm (500 acres) in a recent video on his farm channel and reckons it’d be worth close to 8 million. He says you’d need around that size of farm to bring in around £60K a year.
I call BS.
What does he mean by "bring in around £60k a year"?
is that net profit after tax?
If so, how much of a wage has he and his family took?
He could have 5 family members working for the farm and they are all taking a 100k a year wage each?
The average farm size in the UK is about 200 acres. How do they survive if you need 500 to "bring in £60k".
Well, if I was in any doubt as to what to think on this issue (I wasn't, but hey) then the decent person's rule of thumb has just been applied. See where the likes of Farage stand on the issue and take the other side. It has never failed.
This is a smokescreen. Actual farmers are being used by non-farming tax dodgers and vested interests. I suspect, when this law is enacted we will hear very little from real farmers going forwards, but they'll forever be tainted with the association.
The proposed measures are not unfair.
Pity it had to come to this for one local farmer
https://www.****/news/article-14057491/farmer-inheritance-tax-raid-killed-john-charlesworth.html
This is a bit like the poll tax riots but much posher.
Living in rural Cornwall my Facebook feed today is full of the wear wellies to support our farmers etc posts... I was starting to feel like I was missing something obvious as to why the farmers should be an exception.
It's been great reading this thread & my initial thoughts remain. That farmers should be subject to IHT on amounts that are greater than the vast majority of us will ever see in our lifetime.
I call BS.
What does he mean by “bring in around £60k a year”?
is that net profit after tax?
If so, how much of a wage has he and his family took?
He could have 5 family members working for the farm and they are all taking a 100k a year wage each?
The average farm size in the UK is about 200 acres. How do they survive if you need 500 to “bring in £60k”.
100%. At best it is ignorance, but I suspect it is misrepresentation. I'd be interested to know what the true average margins at each major point down a farm's P&L are.
If I had an £8 million pound asset but wanted to get more than £60K per year and better still not have to work at all I would just sell it.
Let's see - 8,000,000 / 60,000 = 133 I think getting 60k a year for 133 years for doing nothing should do me. I could even go mad and get £120,000 a year for 60 years as I doubt I will be living until 116.
