^This.
i also wonder why so few seem to be Limited Companies?
Is it due to the much stricter rules on accountancy etc? How it's all in the public domain and everyone can see what the true figures are?
There is still no clear explanation of how a business asset can be worth so much, yet generate so little profit?
i also wonder why so few seem to be Limited Companies?
Had this discussion in the shop earlier with a customer. 7 year rule, ltd company and other methods to get around the iht. He reckoned it's because if they created a ltd company it would have to pay corporation tax on profits and tax on company dividends etc which would be higher than the current self employed set up.
There is still no clear explanation of how a business asset can be worth so much, yet generate so little profit?
Because since the introduction of no inheritance tax in 1984 for farm land, wealthy people, who have had no prior reason to invest in land, started buying up land left right and centre. So farmers have ended up assets heavy as the demand for land increased.
There is still no clear explanation of how a business asset can be worth so much, yet generate so little profit?
In a snide little moment earlier, I did think HMRC had missed a trick with so many farmers needing to park up in and around London. A good opportunity to dip a few fuel tanks of personal vehicles too see how many were being run on red...
But obviously fine upstanding farmers would never do anything like that.
Well exactly.. No sane person would 'hold hold onto stock' or invest millions into something that might make you a 1% return*.
The current debit account with my bank is competitive with that! Lol!
*unless there's a few advantages in doing so... Looking at you Jeremy Clarkson!
In a snide little moment earlier, I did think HMRC had missed a trick with so many farmers needing to park up in and around London. A good opportunity to dip a few fuel tanks of personal vehicles too see how many were being run on red…
But obviously fine upstanding farmers would never do anything like that.
I can understand that view to an extent..
But some battles are not worth fighting, etc.
Let the Nigel garage /tommy Robinson types shout all they like.
The inflation of agriculture land prices is not all to do with the Clarksons of the world. If you own an inherited 100 acres at £1000 per acre (1995) it was worth £100,000 and this forms the basis of what you can borrow against. However if that land is worth £10,000 an acre that's £1m. So you can borrow £100,000 to buy another 10 acres no questions asked. Your land is now 110 acres which you have a mere £100,000 debt against a £1.1m asset...
It's a ponzi scheme and it's now biting them in the arse. If agricultural land drops back to £2000 a acre they are pretty much insolvent hence the wider crys of woe in the Farming community. Just for ref. my accountant has 9 Farms on his books and this is his take on it.
As with most things at the minute this has clearly become very polarised (as the thread title I guess predicted). It’s quite hard to argue that the tax loophole shouldn’t be closed, but I think the issue is that it’s been brought in quite fast. A proper consultation and developed policy should be able to address the tax issues whilst maintaining or improving viability and quality of farming.
I kind of feel like giving a handful of rural land owners four decades to hoover up assets and pass them on IHT free was a pretty good deal while it lasted. The fact that the proposed rate is lower and they get a decade to settle the bill (unlike most other "family businesses") seems like a softer landing than many would get. Plus the opaque way some of that land seems to move from agricultural use to housing or industrial development is another thread that I'm sure some land owners might not want pulling on.
Ultimately do you really think they're pissing off many die hard Labour voters with this? I'm surprised SKS/RR have given them such cushy terms TBH, they'll gain nothing for it...
Most of this thread has descended to calling all farmers sponging tax avoiders which is hardly constructive, and is drawing drawing attention away from the likes of clarkson, Dyson and all the dukes.
Context is the thing, the rhetoric from both main parties for some time has been about austerity and financial suffering for all, lots of businesses in various sectors have gone to the wall. While I think we all recognise the supermarket's role in the margins and profitability of UK farming, if the "agricultural community" really wants to test the temperature of wider public sympathy around handing on multi-million pound assets to their kids IHT free, they may well discover they're not universally supported...
There's lots of little pockets of privilege in the UK that all need challenging, I guess it's now government policy to do this one group at a time. No doubt people will remember which groups threw their toys out of the pram, and which took it on the chin (or just quietly went about finding new potential loopholes)... To quote David Cameron "We're all in it together", lovely sentiment, utter bullshine...
It’s a ponzi scheme and it’s now biting them in the arse. If agricultural land drops back to £2000 a acre they are pretty much insolvent hence the wider crys of woe in the Farming community. Just for ref. my accountant has 9 Farms on his books and this is his take on it.
Now that makes sense, if you've borrowed 700k against your land to buy a new combine, or 250k to buy livestock (as mentioned earlier in this thread). If you default on your loan, the bankers won't be happy when they try to recoup funds.
Indeed. Unlike in that Richard J Murphy video… farmers can’t weather a huge drop in land prices any more than a company that owns commercial property can weather a huge drop in office and warehouse pricing (this is what happened to the Coop… lots of wise investment in property… ‘till the wisdom proved to be folly). The “problem” might be asset inflation, but the fix for farmers isn’t to make their assets lose value at speed. This tax change for large estates should help arrest the rise in land values, but it’s unlikely to result in any major downwards correction.
I mentioned further back up the thread that lots of Farmers I know built "agricultural cottages" for family on lots of borrowed money leveraged on the "asset"
One of these cottages was a six bed four bath house for one of the sons...... £500k build, less the VAT naturally and off set against the tax bill.
Nice bit of profit minimisation there.
One of these cottages was a six bed four bath house for one of the sons…… £500k build,
We've had similar around here, I can think of at least two farms, and one equestrian estate which pushed through 'agricultural workers' homes on planning and then family moved in.
Inheritance tax frightens the life out if many Farmers for the reasons above, many are running insane borrowing and overdrafts and servicing the interest payments hoping that in 100 years that £1m debt is buttons.
Ultimately do you really think they’re pissing off many die hard Labour voters with this? I’m surprised SKS/RR have given them such cushy terms TBH, they’ll gain nothing for it…
Agree, should have just done the full IHT that everyone else has to pay. However he impacted farmers any that voted Labour would be anti Labour so nothing to lose if you are going to do anything at all. Full impact then move on, nobody will care about it in 5 years time. Someone is always going to be unhappy when imbalances are corrected / privileges removed.
It would probably be worth the Gov or even an independent body putting a few ads on the telly setting out some simple facts around key policy decisions that affect citizens to counter the huge swathes of deliberate misinformation that is put out by vested interests.
I don’t think having a minister trying to hold a defensive line on BBC breakfast is really going to cut through the noise.
Or the farmers talking to their accountant/tax advisor like anyone else who are sat on x-million worth of something.
We’ve had similar around here, I can think of at least two farms, and one equestrian estate which pushed through ‘agricultural workers’ homes on planning and then family moved in.
Well, my point about red diesel wasn't entirely without first hand experience either.
I went out with a farmer's daughter in my late teens - the farmer, his estranged wife (who still lived in the actual farmhouse with the kids), his new woman and the eldest daughter (my girlfriend) all ran their personal cars on red. I think he packed it in when he came to the attention of police after indulging in his other main hobby of getting pissed and starting fights in pubs once too often.
This was nearly 30 years ago, mind.
IME HMRC has always kept a close eye on red diesel.
My family were butchers who bought stock "on the hoof" from various farmers markets.
They were often dipping tanks of various Land Rovers and Range Rovers at the markets.
This was 40 years ago, not sure if they still have the resource?
There is a large farm near me that developed a lot of ex-agricultural buildings during the aftermath of foot and mouth. They received a lot of grants and supports to do so. They now have a thriving holiday business on top of their farming. More recently they received a grant to redevelop another building that wasn't what they said it was. Someone found out and dropped them in it, they were forced to sell up and repay the money. Don't understand why they weren't prosecuted for fraud?
No sane person would ‘hold hold onto stock’ or invest millions into something that might make you a 1% return*.
But it doesn't does it.
circa 2000, one acre was £3.5k
circa 2024, one acre is £10k
ROI of land itself is, what, 6% (ish)?
The profit in actual factual potato growing and cow milking doesn't seem worth getting out of bed for - but the landowners have been laughing all the way to the Cayman Islands for quite some time.
It's only a return if you sell it.
kind of like every other asset then?
also as noted earlier in thread, its collateral for loans, too
kind of like every other asset then?
No not at all.
I have invested in assets that return a profit every year.
I could sell them and make more profit in the short term, as I have added value to them but more happy to keep them and let them generate a decent return from the work I put into them.
I still don't understand how assets that generate so little revenue can have such a high valuation?
I still don’t understand how assets that generate so little revenue can have such a high valuation?
When tax advisers to the wealthy "discovered" the complete lack of IHT for farms they advised their clients to invest in land and to pretend to be farmers. This drove the price up as we live on a small island and land is scarce (so they would have you believe).
When tax advisers to the wealthy “discovered” the complete lack of IHT for farms they advised their clients to invest in land and to pretend to be farmers. This drove the price up as we live on a small island and land is scarce (so they would have you believe).
It still makes no sense.
It's almost like the 17th Century Tulip Mania.
I still don’t understand how assets that generate so little revenue can have such a high valuation?
In an undistorted market, they wouldn't. Land would be priced to reflect the return, like any other asset. And I guess in a way, it still is - it's just that the return comes from the tax exemption, rather than working the land.
This drove the price up as we live on a small island and land is scarce
Well they're (whoever that is) not making any more and in the East we're losing land.
I hadn't quite realised just how much Farage had actually raided the dressing up box when he joined the protest. Do farmers genuinely not see this as anything other than Farage just taking the piss out of them?
I guess it’s now government policy to do this one group at a time.
Off topic I know!
I imagine private landlords will also come under some more scrutiny at some point. A colleague on mine is has a 'portfolio' of rental properties. He doesn't take any income from them, just 'reinvests' by securing loans against the income of the property purchases another one. I did say to him aren't you worried that you may fall foul of IHT when you cash out or leave them to you kids. No he says. He has set up a limited company and his wife & kids are share holders so will only pay IHT on his shares that are handed over instead of the whole business.
The Tax system is crooked towards the asset rich, have a business that doesn't make anything, borrow large against it and it looks like you don't make any thing so the tax bill is negligible.
Back on topic,
I imagine the small family farmer is feeling some despair at the moment. For me the big problem is the big guys will already have a way around IHT because nothing will be passed over as inheritance.
The Tax system is crooked towards the asset rich, have a business that doesn’t make anything, borrow large against it and it looks like you don’t make any thing so the tax bill is negligible.
But isn't your example the same for any business seeking to expand? No wages are taken and the income is being re-invested to service growth. Presumably there'd be less opprobrium if it was a widget factory using profits to service debts on new widget machines?
i think the crux of this could be solved by a differentiation of the term
"Farmer" and "Land owner".
They are not the same, obviously
Just had to venture into the worst hive of scum and villany on the internet, LinkedIn (spit spit).
I saw in passing a comment thread containing "I will be impacted by this, as will many of my neighbouring farms"
The guy is the MD of some scientific equipment manafacturer. He might own the land, but i dont think you have time to be farming all hours of the day, AND be the head honcho of a business in an entirely different industry (or field, if you like a pun) (And posting inspirational nonsense on LinkedIn)
I hadn’t quite realised just how much Farage had actually raided the dressing up box when he joined the protest. Do farmers genuinely not see this as anything other than Farage just taking the piss out of them?
Well the fat bloke and the East 17 wannabe seem to be laughing at him!
I think Farage has decided to piggyback off the backlash to Jaguars "woke" advertising campagin instead now. Got to keep pushing those culture wars!
I saw that both Farage and Tommy Robinson are outraged by Jaguars new rebrand. I reckon Jaguar have only done it as an absolutely priceless piece of gammon baiting. I imagine the crossover from the protesters the other day and owners of JLR products will be about 98%
If you’ve somehow not seen it, sit back, enjoy and picture the Barbour jackets and Hunter wellies exploding with rage 😀
@Olly that's multi-tasking (or for the details type doing many jobs poorly instead of one properly).
Are Jag and Land Rover still one and the same?
JLR, Do the same with the LR range! PLEASEEEE!!! it would be hilarious.
Part of the media hysteria becomes very easy to understand when you learn that Jonathan Harmsworth, the 4th Viscount Rothermere, aka the owner of the daily Mail owns 4,700 acres of farm land that he rents to tenant farmers. I bet he has scurried off to his tax advisors. Nothing like riling you readers into supporting your campaign to parent the closure of tax avoidance options
It still makes no sense.
What you should ask is why has "becoming a farmer" become so popular over the past thirty years, so as to drive up land prices at twice the annual rate of house prices? You though houses had appreciated rapidly? About 3.8% per year. Land has been double that. Farming seemingly is a very desirable profession to enter. For farming, read land owning. You could even grow tulips and hope for another bubble!
I don't know anyone who has "entered" farming in the last 30 years, it's financially impossible. The Farmers I know will never sell their farms - they know nothing else and have very little transferable skills. They are also "Farmers" that is their self identy if they stop farming they become nothing. For many if they sell the farm they will be judged as failures.
Many are quite sad individuals locked in a life of farm, mart, pub. I think the high suicide rate in some cases stems from this.
Some I know live in shit holes, drive a landrover and their annual holiday is a day at the great yorkshire show. Not short of money just don't know how to enjoy it.
The people who’ve had everything their own way for the last 14 years really don’t like the interruption to their gravy chain, do they?
It does however show their arrogance to expect any kind of public sympathy for multimillionaires having to pay tax like everybody else. And by default and because they’re one of the same, the Tory party have hitched themselves to the wagon of the millionaire landowners
Its almost as if the Labour Party chose to have this this particular fight to make a point.
Just read this article, and I’m wondering how to reconcile the demands that hedges, some of which are centuries old, that are hugely important to the health of our natural environment, and which are left to farmers to maintain, should have more spent to restore decades of damage, but the government wants to take huge amounts of money from those inheriting the land, so how are they supposed to find the money to run the farm, and on top pay for specialists to help advise on the restoration. Proper hedge-laying, which often has different techniques unique to different regions or counties, is a skill that takes years to learn, takes a long time to do properly, and isn’t cheap.
It seems to me that, in leu of the duties going to the government, they should be used instead to help with this crucial restoration process.
