The Treasury is considering changes to its inheritance tax reforms for farmers, in the wake of the backlash to Chancellor Rachel Reeves’ Budget announcement, according to the Guardian.
It says the Treasury is understood to be assessing the impact of changes, including amending gifting rules for over-80s so they can pass on their farm to their family without having to live for seven years after making the gift. Officials are also understood to be assessing the impact of changes announced in the budget in October on active small- and medium-sized farms compared with smallholdings.
The reports follows the farmer rally in Westminster, which, attended by more than 10,000 people, highlighted how working will be impact by the decision to remove APR above the £1m threshold.
It also comes as the as NFU publishes detailed new calculations, which it says ‘prove why the Treasury is working off the wrong figures’.
“The government’s initial claim that only 27% of farms will be affected by the new IHT policy materially underestimates the true proportion. We find that around 75% of commercial family farms will be above the £1 million threshold,” the NFU states.
Farmers met the Treasury on Thursday and proposed that older farmers should be exempt from gifting rules, meaning if they died less than seven years after handing the family farm down to their relatives, they would avoid the inheritance tax, according to the Guardian report.
Labour said it introduced policy to target wealthy investors buying land to avoid IHT, but, in reality, it is set to cause the most harm to ‘asset rich, cash poor’ farmers who will be unable to pay it without selling at least part of their business.
Treasury sources, according to the report, said the impact of changing gifting rules for those aged 80 and over was being examined, but added that the impact was difficult to determine as data on the farming population has generally put all those over 65 into one bracket.
NFU president Tom Bradshaw said this change would not go far enough: “The average age of death in the UK is around 80, so they should bring it down to 73 to allow them to use the seven-year gifting rule.
“If they are looking at how they create an exemption for the elderly members of the industry then the exemption should come in seven years before the average age of death. I would prefer an exemption before April 2026, when the rules come in, so you can make the transfer and don’t have to survive the seven years, but we have far better options on the table if they come out for consultation.
“We could come up with a policy that would answer the questions but be far better for the industry.”
However, officially, the government is not shifting its stance. A Treasury spokesperson said: “We remain committed to fully implementing the policy and are not considering mitigations.”
Change of mind
Defra Secretary Steve Reed, who previously assured the industry on public platforms that a Labour government would not reform APR, said he had changed his mind because of the £22bn black hole in the government’s finance left by the Conservative government.
But he told the Country, Land and Business Association conference on Thursday that the government is ‘listening’ to farmers.
“I know the pain people feel. Many other people tell me how difficult this is, of course, we’ll listen to try and understand how we can make that easier to bear,” he said.