If a farm is worth too much for an individual to pay inheritance taxes on, let it pass on to a collective or company of individuals with enough pooled money to run it. No need to have a single person own such a massive piece of industry.
Comment on Thousands of UK farmers protest against inheritance tax hike
speendle@feddit.uk 1 day agoI was born and brought up in an extremely rural area of the westcountry, and I’m well aware of the “farmer hard times” saying as farmers drive past in e.g. brand new landrovers, but this inheritance tax change has not been thought through. Assuming a farm is liable to inheritance tax, where does the money come from without liquidating assets? Sell part of the farm? So then you have a small piece of land with agricultural use restrictions, no infrastructure, probably too small to form a separate farm. Repeat for a few generations and all the farms are then the same size, with efficiency of scale problems - not to mention where do the new farmers come from? Sell farm machinery - great, you’ve no business. Sell your stock - you’ve no business.
Much better to tax people when they are alive, on their earnings, and expand it to all earnings from any source, lumped together and charged at the relevant rate of income tax.
SmoothOperator@lemmy.world 1 day ago
tankplanker@lemmy.world 1 day ago
They get ten years to pay it, its not subject to payment in one lump sum. Its also half the usual rate of tax, and only on anything over £3m if married and using all the allowances. On a £5m farm its about £40k a year for 10 years, not insignificant but inflation over 10 years will reduce the sting of it and you can even end load it by only paying back 1% initially and more at the end to further let inflation do its thing.
speendle@feddit.uk 1 day ago
Thank you for the detail - I understand it’s not necessarily due in one go, but “even” 40k per year is still not loose change that the vast majority of farmers will have lying around, and my point about having to liquidate assets still stands, whether a smaller amount of assets per year or deferred. The wealth of most farms is tied up in the land and property, and the items required to run the farm in the first place. A further point would be that if it is to be considered a small, easily repayable sum, then given the small number of farmers likely to be affected each year in the first place, why bother? It’s not a significant source of government revenue and risks driving some farms out of business, for what?
tankplanker@lemmy.world 1 day ago
Assuming you aren’t living in the Cotswolds or other areas dominated by hobby farmers who over pay and under produce while have significant competition for the price of large houses that pushes up the cost per acre. £5m out side of these areas purchases a good few acres. At £10k an acre (roughly in the upper third for cost) that’s about 500 acres with farm buildings.
Even in a shit year with the wrong sort of production you should be clearing £250 per acre per year, or about £125k for 500 acres. Well run farms who pick the right crops for that year clear double that. £40k is significant but its not going to leave them in the poor house, particularly when you can stagger the payments to allow for inflation and also for poor yielding years.
That doesn’t include the various subsidies, which while even shitter than ever, they are hardly zero if you pick the right crop. Nor does it include any diversification, which any sensible farmer would already be doing. I don’t doubt this is going to result in a number of farms being forced to sell, but then were they ever actually viable in todays market?
The zero inheritance tax rule has to change because of people like Clarkson who have freely admitted to only buying their farm to avoid inheritance tax. Its pushed up the cost of farms as now you are competing against hobby farmers like Clarkson, or those who use a tenant farmer who is now priced out of the market to buy their own farm, or even worse, the farm just notionally farms with tiny herds.
I particularly dislike Clarkson and others pretending that its going to hit 96% of farmers, when the majority are well within the £3m, and with careful planning using the revised gifting rules you can extend it much higher than that. Most of those that are worried have their kids living and working on the farm, by carefully arranging how you hand over their property and some of the land, if done early enough, you can extend that.
speendle@feddit.uk 1 day ago
Sadly I’m running out of time, and thank you again for your detailed reply, but a couple of points: the Clarkson example could be better handled through taxation on his earnings during his lifetime, your prices are primarily relevant to land rather than complete farms - typically in Devon/Cornwall you’d be looking at 15-30k per acre when farmhouse etc. is included, and finally the money made running a farm often ends up reinvested or used in the subsequent running of the farm, so stripping £40k out of it in your example would significantly affect the running of the farm the next year and so on. Ok, got to rush…
koper@feddit.nl 23 hours ago
There’s really no need to liquidate anyway. If the farm is even remotely profitable, the revenue will be much more than the tax payments. And even if the owner does need the liquidity for some reason, it’s perfectly normal to borrow against assets. That’s just cost of capital.