Typical family farm ‘would have to spend 159% of its profits for a decade to pay inheritance tax’, says rural land group
A typical family farm would have to put 159% of annual profits into paying the new inheritance tax every year for a decade and could have to sell 20% of their land, according to new analysis.
Chancellor Rachel Reeves announced in her 30 October budget farms would no longer get 100% relief on inheritance tax, and from April 2026 will have to pay 20% tax on farms worth over £1 million.
The announcement has sparked anger among farmers who argue this will mean higher food prices, lower food production and having to sell off land to pay for the tax.
Politics latest: PM has no plans to meet Taliban at climate summit
Ministers said the move will not affect small farms and is aimed at targeting wealthy landowners who buy up farmland to avoid paying inheritance tax.
However, analysis by the Country and Land Business Association (CLA), which represents owners of rural land, property and businesses in England and Wales, found a typical 200-acre farm owned by one person with an expected profit of £27,300 would face a £435,000 inheritance tax bill.
The plan says families can spread the inheritance tax payments over 10 years, but the CLA found this would require an average farm to allocate 159% of its profits each year for a decade.
To pay that, successors could be forced to sell 20% of their land, the analysis found.
Farmers protested against the plan outside a farming conference in Northumberland. Pic: PA
The CLA said their model shows how family farms, which are mostly asset-rich but cash-poor, would be forced into a cycle of stagnation, asset sales or debt to cover the tax.
This would threaten the long-term viability of the UK’s rural landscape and food security, the association said.
The government has said other tax relief will still apply to farmers, so if a married couple owns the farm they can pass on the land and property valued up to £3m to a child or grandchild tax-free.
This is made up of the £1m each of agricultural property allowance plus £500,000 each in standard tax-free allowance for passing on an estate worth less than £2m to children or grandchildren.
The CLA’s analysis found a 250-acre arable farm owned by a couple with an expected annual profit of £34,130 would still face an inheritance tax bill of £267,000 – 78% of its profit each year over a decade.
Read more:
Most farmers unaffected by tax change, IFS says
Inheritance tax change could be Reeves’ ‘pasty tax’
Please use Chrome browser for a more accessible video player
Farmers feel ‘betrayed’ after budget
Gavin Lane, deputy president of the CLA, said: “Either the government isn’t being honest with the public about the true impact of these reforms, or they don’t understand the nature of rural businesses.
“I’d like to believe it is the latter and that they are prepared to listen to our input rather than continually trying to dismiss it.
“While they frame this as a tax on the wealthy, the reality is that ordinary family farms will be hit just as hard.
“Asking farms to use their income to pay a huge capital tax bill over 10 years, if indeed it is possible, will threaten the future of investment and the viability of the business.”
File pic: iStock
The Treasury said the change will make inheritance tax relief “fairer, protecting small family farms”.
An explanation of the plan on the government’s website said the top 7% (the largest 117 claims) of agricultural property relief claims account for 40% of the total relief, costing the taxpayer £219m.
The top 2% of claims (37 claims) account for 22% of agricultural property relief, costing £119m, it says.
Keep up with all the latest news from the UK and around the world by following Sky News
“It is not fair for a very small number of claimants each year to claim such a significant amount of relief, when this money could better be used to fund our public services,” the website adds.
It also says the chancellor announced £5bn to help farmers produce food over the next two years, alongside £60m for the Farming Recovery Fund to help farmers recover from the impact of flooding.
Sky News has contacted the Treasury for a comment on the latest analysis.
A 53-year-old man has been charged after a car was driven into a crowd at Liverpool FC’s trophy parade.
Paul Doyle, from the West Derby area of Liverpool, has been charged with seven offences, Merseyside Police said.
The businessman, who is a father-of-three, is accused of two counts of unlawful and malicious wounding with intent to cause grievous bodily harm, and two counts of causing unlawful and malicious grievous bodily harm with intent to cause grievous bodily harm.
Paul Doyle
Doyle is also accused of two counts of attempted unlawful and malicious grievous bodily harm with intent to cause grievous bodily harm, and one count of dangerous driving.
He is due to appear before Liverpool Magistrates Court on Friday.
The charges relate to six people, including two children. A wounding charge and an attempted grievous bodily harm charge relate to a child.
A police car was outside Doyle’s four-bedroom detached family home in the West Derby area on Thursday morning.
According to his social media, he has travelled extensively including Japan, Fiji, India and Australia. Doyle has posted pictures of himself competing in triathlons, and climbing Mount Kilimanjaro.
Please use Chrome browser for a more accessible video player
New Liverpool incident footage
Thousands of fans were gathered in Liverpool city centre on Monday to celebrate the Premier League champions’ title win when a car struck a crowd on Water Street.
Police said a total of 79 people were injured in the incident, with the youngest aged nine, and the oldest being a 78-year-old.
Seven people remain in hospital in a stable condition.
Forensic officers at the scene in Water Street. Pic: PA
‘Huge volume of evidence’
Chief crown prosecutor for the CPS Mersey-Cheshire, Sarah Hammond, told a news conference on Thursday that the investigation was at an early stage and a “huge volume of evidence” was being reviewed.
“This includes multiple pieces of video footage and numerous witness statements. It is important to ensure that every victim gets the justice they deserve.
“The charges will be kept under review as the investigation progresses.”
Police ‘working tirelessly’
Also at the briefing where the charges were announced was Assistant Chief Constable of Merseyside Police, Jenny Sims, who said: “I fully understand how this incident has left us all shocked and saddened, and I know many will continue to have concerns and questions.
“Our detectives are working tirelessly, with diligence and professionalism, to seek the answer to all of those questions. When we are able to, we will provide further information.”
The youngest victim injured in the Liverpool parade crash on Monday is nine years old, police have said.
They added that the oldest is 78, with all 79 people injured understood to be British. Seven remain in hospital in a stable condition.
Merseyside Police declined to say what drug the 53-year-old man arrested over the incident is alleged to have taken.
“We wouldn’t go into this detail at this stage of the investigation,” the force said.
Police at the scene in Liverpool. Pic: AP
Forensic officers in Water Street. Pic: PA
Police are still questioning the driver and were granted further time to do so on Wednesday.
Officers have until Thursday evening to question the man from West Derby.
He is in custody on suspicion of attempted murder, dangerous driving and drug driving.
Police believe the car which struck pedestrians was able to follow an ambulance crew attending to someone suffering a heart attack after a road block was temporarily lifted.
Hundreds of thousands of Liverpool fans had turned out to celebrate their team’s Premier League title when the incident unfolded on Water Street just after 6pm on Monday.
Please use Chrome browser for a more accessible video player
‘My boy in his pram, got bounced’
‘The best day of my life turned into worst’
Sky News interviewed a lifelong Liverpool fan who said his five-month-old son was “bounced” 15ft (4.6m) in his pram after they were hit by the vehicle.
The child was not counted in the police’s injury tally.
Daniel Eveson, 36, also said his partner had been driven over.
“The best day of my life turned into [the] worst,” Mr Eveson said.
He added: “Me and my partner were flat on the roof, on the bonnet… we were just both trying to hold on for dear life with Ted next to us.
“And my partner went under the wheels of the car, of the front of the car, and it rolled over her leg, and I just bounced off to the side, but my boy and his pram got bounced totally in the opposite direction – about 15ft down the road.”
Read more:
How the parade crash unfolded
Police given more time to question Liverpool suspect
Why police released ‘unprecedented’ details
Prime Minister Sir Keir Starmer travelled to Liverpool to meet with police chiefs and the local metro mayor.
He said he was being kept informed of developments, adding: “The scenes on Monday were just awful, to see how incredible joy at an amazing achievement turned to horror in a moment.”
Messages of support have been sent to the people of Liverpool, including from the King who said: “I know that the strength of community spirit for which your city is renowned will be a comfort and support to those in need.”
The Prince and Princess of Wales said they were “deeply saddened” by the incident.
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business3 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway