In the subsequent few weeks tractors stuffed with indignant farmers may roll by way of the stately streets of Westminster. They have had sufficient, they are saying. The change to inheritance tax within the authorities’s price range final week was a blow – however it was additionally the newest of a protracted collection of blows. This is, apparently, as a lot as they’ll take.
Rachel Reeves stirred up anger when she made a shock announcement on the price range that farmland price greater than £1m could be topic to inheritance tax. Since 1992, agricultural property reduction (APR) has meant household farms have been handed down tax-free in a coverage meant to bolster meals safety and hold individuals on the household land.
This is simply the newest coverage to have an effect on agriculture over the previous couple of years. For a long time there had been anger over painful offers with supermarkets which, farmers mentioned, pressured them to chop margins to the bone. Then got here Brexit, which introduced damaged guarantees over commerce offers with Australia and New Zealand permitting low cost meat produced to decrease requirements into the UK and incensing farmers who felt undercut. It additionally meant a transition away from the subsidies of the EU’s frequent agricultural coverage to a scheme during which farmers are paid for environmental items, the supply of which was botched and delayed. Farmers have additionally confronted new export challenges and wrestled with entry to much-needed seasonal employees.
Farmers have additionally felt deserted when excessive climate circumstances brought on by local weather breakdown have worn out complete crops, whereas inflation has made enter prices resembling gasoline and fertiliser rocket.
The National Farmers’ Union (NFU) president, Tom Bradshaw, mentioned: “After enduring years of being squeezed to the lowest margins imaginable, farmers are grappling with sky-high production costs for fuel, feed and fertiliser. Coupled with significant post-Brexit policy shifts and increasingly extreme weather conditions, there is nothing left for our nation’s food producers to give.”
The NFU is asking the federal government not solely to reverse the modifications to inheritance tax, however for a swathe of insurance policies. They need a statutory dedication to make sure the UK’s self-sufficiency doesn’t drop under its present stage, making certain meals imports are produced to the identical requirements as those who British farmers are required to fulfill. They additionally need a assessment into provide chain equity as a result of farmers’ margins have been squeezed as supermarkets make report earnings. A current examine discovered farmers take house lower than a penny for each block of cheese or loaf of bread offered within the grocery store.
The union is bringing 1,800 of its members to Westminster on 19 November to fulfill MPs and it’s anticipated different farming teams will stage a extra “militant” protest on the identical day – though this has not been sanctioned by the NFU. Some farmers have even threatened to go “on strike” to disrupt meals provides.
Reeves’s price range hit notably exhausting as a result of many farmers really feel unfairly blamed for a problem brought on by a tax loophole exploited by the mega-rich. As a results of that loophole, the worth of land they’ve owned for generations has skyrocketed as buyers have purchased up farmland as a tax wheeze. As a consequence, if farmers cross the land on to their youngsters, the tax invoice may eat up a lot of the revenue made by the farm.
Will White, a farm sustainability coordinator at Sustain, mentioned: “Land values have soared, partly due to wealthy individuals exploiting the system, but it shouldn’t be farmers – particularly those committed to nature-friendly farming – who end up paying the price for this. Land should not be a tax haven for the wealthy. But this policy needs to find a way to distinguish between farmers working to provide public goods and nutritious food, and wealthy individuals seeking a tax break.”
Farmers additionally suppose the federal government just isn’t being straight with them in regards to the coverage; the Treasury claims the modifications will solely have an effect on 28% of farms, however knowledge from the Department for Environment, Food and Rural Affairs reveals two-thirds could possibly be caught by the tax.
Martin Lines, the CEO of the Nature Friendly Farming Network, mentioned: “The speed at which the government is implementing these changes, along with the short timeframe it has set out, is neither particularly helpful nor fair. Farmers have been given very little time to plan their succession and ensure they can transition effectively from the old tax scheme to the new one.”
Some within the sector suppose it’s truthful to ask the wealthiest to pay their share. As many farmers make a meagre living and stay in areas topic to cuts to GP surgeries and public transport, a extra equitable system could possibly be useful.
Guy Singh-Watson, the founding father of the natural vegetable field firm Riverford, is a household farmer and grows greens on 60 hectares (150 acres) in Devon. He mentioned that though he was indignant in regards to the tax at first, when he seemed into it it appeared truthful and that these complaining have been the mega-rich.
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“Let’s be honest about where the loudest opposition to this policy is coming from and what their role has been on the value of our land,” he mentioned. “The unintended consequence of the tax break given to landowners has been to inflate land prices and effectively exclude new entrants who are not substantial beneficiaries of their parents.”
Singh-Watson mentioned: “Land in the French Vendée – where I’ve owned a 300-acre farm for the last 15 years – is less than a 10th of the price of equivalent land in Devon, where I also farm. To be a farmer there [in France] you have to be deemed fit to farm by the local administration. I doubt whether those who are simply buying up our country to keep more money and assets for themselves would pass that test. As a farmer of 50 years I have campaigned vigorously to defend the UK’s family farms but it should offend all farmers with mud on their boots that these people are claiming to represent us when in reality they are the ones making farming less affordable for genuine farmers.”
He mentioned there may be one other solution to elevate cash that might upset farmers much less and be extra equitable and lift billions moderately than the £500m anticipated to be gained from the APR modifications.
Singh-Watson mentioned: “Given that Reeves wanted to extract some of the £40bn in tax rises needed to rebuild our country partly from landowners, another way to do this could have been to look at the 10- to 100-fold increase in land values when planning permission is granted. Farmers who benefit from this uplift can pay no tax whatsoever if the funds are ‘rolled over’, ie reinvested in land. Taxing these capital gains could arguably raise more and would probably be far less contentious.”
Another choice, suggests White, is that the big agribusinesses and supermarkets that are chargeable for the inequity within the provide chain may have been focused as an alternative. “While some farmers will have to pay more, supermarkets and large agribusinesses continue to squeeze every last drop out of the food supply chain, leaving polluted rivers and ever more minuscule margins for farmers,” mentioned White.
“This is a deeply unfair and extractive system. A fairer and more lucrative approach from government would be to start by taxing and better regulating the bigger players in the supply chain, where the real profits are made.”
