Comment on Thousands of UK farmers protest against inheritance tax hike
tankplanker@lemmy.world 1 day agoThey 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…
tankplanker@lemmy.world 23 hours ago
I already covered over priced areas in my previous post, and the south west squarely falls into that category.
Frankly if you have 500 or more acres in that area and you aren’t already making bank from farming then you would be an utter, complete moron not to sell for the £10m+ that you would net from the sale. You could even buy a similar sized farm in a cheaper area and bank half of it. Plenty of farmers selling up as they have no family who wants to take it on.
Taxation on the rich should be both on salary and on assets, especially assets that appreciate like land, otherwise we end up with the rich owning everything. The rich have massively larger purchase power than everybody else even if they were taxed fairly. We have to start somewhere with reversing that.
koper@feddit.nl 19 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.