12:00pm
12:00pm, 20 Nov 2024
26,148 posts
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larkim
Maybe this is just me being me, but I don't think it's massively helpful to ignore those sorts of "real world" scenarios. Let's say, farm worth £4.5m. £3m threshold due to spousal gifts etc works fine. Farm makes profits, after paying for reasonable lifestyle of farming family plus normal course of business, of £30-£50k per year after tax, but before they've invested in new tractor, new combine, new milking equipment etc. Tax due is £300,000 due over 10 years. So £30k pa cash to find. And let's assume profit = cash for simplicity. So that's a business for the next 10 years that has either zero or £20k max to invest in essential equipment for the business. Or they choose to sell maybe 6-7% of their land / assets to fund the IHT. So the business produces less / makes less profit. That's not just "wealthy land owner pays the taxes the rich should pay", it is something of a challenge to overcome. Like I suggested above, borrowing may well be the answer, but there is a cost to that. And the less profitable that the farm is, the harder the cash will be to raise, and (in all likelihood) the less liquid the assets of the farm will be to be sold. (There is an inherent contradiction in this too of course - if the land doesn't produce much profit, then it is not worth very much in that use, therefore the farm won't be worth much, therefore there won't be much if any IHT to pay; unless there is an alternative use for the land which is profitable, such as solar farming etc) |
12:36pm
12:36pm, 20 Nov 2024
4,225 posts
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Big_G
Larkim, Harry Matcalfe did something on this after the budget on his ‘Harry’s Farm’ channel. His main worry was, say, an 80yo finding themselves still alive come March 2026 and wondering where the family were going to get the money from to pay the tax, if they want to keep the farm going. I think one issue is it wasn’t needed to be thought about before, but now of course it is. Just checked his YouTube channel and it started before Clarkson’s Farm, although they do know each other, live nearby and I guess are more well known from the car world (Matcalfe started EVO magazine, and I guess his main channel is Harry’s Garage). As an aside, he has spoken a lot about government schemes, which are basically encouraging/paying him to grow less food from next year. Usually he’d grow break crops, but there are various stewardship schemes in place where fields are left to grow wild, attract wildlife etc, and he’s signed up to that, to in his words ‘to secure the business’, after making a loss last year. But his food production on his farm will be way down as in his situation, he’s going from actively farming 350 acres to 118 acres next year. All the rest of the land is in some form of environmental scheme. This is the scheme he is using, but I’ve no idea how many other farmers use these. gov.uk |
12:40pm
12:40pm, 20 Nov 2024
11,837 posts
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Fields
They should examine the corpse to decide whether they were an actual farmer or a posh landowner If the hands of the deceased are calloused, and there’s mud under the fingernails they can get an exemption, otherwise full inheritance tax is to be paid |
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1:46pm
1:46pm, 20 Nov 2024
26,150 posts
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larkim
To be clear though, I'm not advocating for no IHT, or in fact that the govt's choice is wrong. Just having at least an ear to the fact that the change will cause some "impact" on farmers, both callous-fingered and otherwise, and whilst the overall answer may well be "just suck it up" it doesn't mean I'm completely immune to a spoonful of sympathy for some family farms that find themselves experiencing this tax over the next few years.
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2:43pm
2:43pm, 20 Nov 2024
33,429 posts
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Johnny Blaze
They do have 10 years to pay, so there's that.
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2:53pm
2:53pm, 20 Nov 2024
497 posts
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DaveG
Sympathy is fine, but needing to do anything about it is a different question. In the above example of a £4.5m farm, then to get a £4.5 IHT-exemption valuation would probably be a farm worth more than that. Buildings are only calculated at 70% of their value, and land only on the agricultural use not commercial use (i.e., land with little value to farmers but lots to wind turbines is priced based solely on what farmers would pay for it). So the real value could be much higher. Regardless, where does £30k a year come from is the same regardless of the value of the farm. But I'd ask a different question - what other things have costed those types of farms £30k a year. Brexit is certainly likely to be one. Lots of farming subsidies were lost, wages of agricultural workers have soared, for instance. There's probably lots of things that farmers have had to just swallow up which amount of similar amounts to the IHT payments for the more modest farmers impacted. |
2:58pm
2:58pm, 20 Nov 2024
51,382 posts
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HappyG(rrr)
Ofgs, this is such a non-topic, I can't believe you lot have managed to put 100 posts worth of debate across last week or so! Very top end of farmers now have to pay some tax on assets the will bequeath to next gen. Closing a 20 year old loophole in tax regs. There are much bigger topics, even in farming, for politicians to address: How to incentivise farmers to properly look after the land. Reduce use of harmful pesticides and other chemicals. Ensure land is accessible to those who want to be able to enjoy fresh air and free exercise walking and cycling. Ensure proper animal welfare standards are maintained at * all * times. Preferably encourage customers to move to more vegetable and less animal based diet and align farm design and support based on these. And so on. |
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3:07pm
3:07pm, 20 Nov 2024
33,430 posts
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Johnny Blaze
According to The Archers the hot topics are Beavers, Passivehauses and dead cats.
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