The NFU has called for the government to overturn changes to Inheritance Tax (IHT), announced in last week’s Budget, after meeting Defra Secretary Steve Reed and Treasury officials to highlight the huge impact they will have on farming families.
In the meeting, NFU President Tom Bradshaw outlined exactly what the changes to Agricultural Property Relief (APR) would mean for family farms across the country, the knock-on impact on homegrown food production and the stress and anxiety these planned changes are causing.
The meeting comes amid a huge backlash to the changes announced last week by Chancellor Rachel Reeves, with more than 130,000 people having already added their name to the NFU’s ‘stop the family farm tax’ petition, which is part of a wider lobbying campaign, taking place against the backdrop of significant media interest.
Following the meeting, the government doubled down on its justification for the policy, claiming the ‘vast majority of those claiming relief will not be affected by these changes’ and describing it as ‘fair and balanced’.
But Mr Bradshaw said the government must now listen and overturn this policy. “I’ve spoken to a huge number of our members in the past few days and heard some really upsetting accounts of what this tax would do to family farms,” he said.
“I’ve heard about distressed elderly parents who are having to apologise to their children in tears for something that isn’t their fault, telling them they’re sorry because they feel they’re now a burden on the family.
“I’ve heard from families who can’t see any way they can plan for a future which doesn’t result in losing their business. Men and women who’ve spent years building up farm businesses now wondering what’s the point in carrying on when it’s going to be ripped apart.”
Miscalculation
The government claims only 27% of farms will be affected by these changes, pointing out that individuals can pass on up to £325,000 inheritance tax free, and £500,000 if it includes a residence to a direct descendant, and £1m when a tax free allowance is passed to a surviving spouse or civil partner. This means an individual can pass up to £2m and a couple can pass up to £3m between them to a direct descendant inheritance tax free, under the changes, it claims.
However, the NFU disputes the Treasury’s figures, pointing out that different Defra’s figures show that only 34% of farms are under £1 million net worth.
Treasury officials have assumed that all previous APR claims are working farms, which is not the case, while these claims do not include those eligible for Business Property Relief (BPR), it says. The NFU also points out that the Treasuary figures also include a substantial number of smallholdings, whereas, in reality, very few viable farms are worth under £1 million, which could buy 50 acres and a house today. The average farm in the UK is more than 250 acres.
Mr Bradshaw said: “These are the working people of the countryside, and I made it clear to Defra and the Treasury today that there has been a clear miscalculation of the impact this will have on them. The Treasury has got its figures wrong. This policy won’t protect family farms, it will do the opposite.
“Far from protecting smaller family farms, which is what ministers say they’re doing, they’re actually protecting private houses in the country with a few acres let out for grazing whilst disproportionately hammering actual, food-producing farms which are, on paper, much more valuable. Even Defra’s own figures show this, which is why they’re so different to the Treasury data this policy is based on.
“With Defra data showing two thirds of farms could be affected, it was good to hear that the Treasury would look at the discrepancy in figures.
“At last year’s NFU Conference, we heard from Sir Keir Starmer that ‘Losing a farm is not like losing any other business, it can’t come back’. He was absolutely right. It can’t. And neither can its ability to produce food for the nation. That’s why the only sensible course of action is for the Treasury to reverse this decision.
“The pressure is building. Defra and the Treasury are aware that on November 19, NFU members will be making their way to Westminster to take part in our mass lobby of MPs. We will be looking them in the eye and asking if they support this family farm tax, or if they will do the right thing for their farming constituents and support our call for it to be reversed.”
‘Fair and balanced’
After the meeting a government spokesperson said the government’s commitment to our farmers ‘remains steadfast’.
“We understand concerns about changes to Agricultural Property Relief and the Defra Secretary of State and Exchequer Secretary to the Treasury met with NFU President Tom Bradshaw today.
“Ministers made clear that the vast majority of those claiming relief will not be affected by these changes. They will be able to pass the family farm down to their children just as previous generations have always done.
“This is a fair and balanced approach that protects the family farm while also fixing the public services that we all rely on. We remain committed to working with the NFU and listening to farmers.”