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.
UK
Masked burglars ‘raid’ Windsor Castle grounds ‘while William, Kate and children slept at home on estate’
Masked burglars have stolen farm vehicles from the Windsor Castle estate while members of the Royal Family are believed to have been asleep nearby.
Two men scaled a 6ft fence on the night of 13 October and used a stolen truck to break through a security gate, The Sun first reported.
The pair then fled with a pick-up and a quad bike that were stored in a barn.
The King and Queen were not in residence.
But the Prince and Princess of Wales, along with their three children George, 11, Charlotte, nine, and six-year-old Louis were believed to have been in their home, Adelaide Cottage, on the estate, according to The Sun.
The family moved there in 2022.
In a statement, Thames Valley Police said: “At around 11.45pm on Sunday 13 October, we received a report of burglary at a property on Crown Estate land near to the A308 in Windsor.
“Offenders entered a farm building and made off with a black Isuzu pick-up and a red quad bike. They then made off towards the Old Windsor/Datchet area.
“No arrests have been made at this stage and an investigation is ongoing.”
Keep up with all the latest news from the UK and around the world by following Sky News
On Christmas Day 2021, a man climbed a fence at Windsor Castle armed with a crossbow and claimed he wanted to kill Queen Elizabeth II.
Jaswant Singh Chail was handed a nine-year custodial sentence for treason, possession of an offensive weapon and making threats to kill.
The UK is braced for “disruptive snow” as yellow weather warnings cover large parts of the country until Tuesday – with the Met Office saying there is the “potential” for the alerts to be “escalated”.
The forecaster has warned up to 20cm of snow may accumulate in the worst affected areas as the country experiences its “first taste of winter”.
The Met Office has also told people to expect ice, cold temperatures and wintry showers this week.
Check the forecast in your area
A yellow warning for snow and ice is in place for much of the north of the country – covering areas in the East Midlands, Yorkshire, Wales and the north of England – from 7pm on Monday night to 10am on Tuesday morning.
Those in the impacted areas have been told power cuts are possible and mobile phone coverage might be affected.
The Met Office has said there is a “slight chance” some rural communities could be cut off and that bus and train services may be delayed or cancelled.
People are also warned to be careful not to slip or fall on icy surfaces.
The Met Office has said there will be bright spells across northern and eastern areas throughout today, but rain in the south and west will gradually spread northeastwards and turn to snow over northern hills.
Parts of the UK are experiencing their ‘first taste of winter’, says the Met Office. File pic: PA
Tom Morgan, Met Office meteorologist, said: “We could see some disruptive snow in the Pennine regions, in particular, the Peak District as well, especially Monday night, but we could well see some impacts lasting on until Tuesday morning’s rush hour.
“Even down to lower levels, we could well see some snow as well, so quite a bit of disruption possible by Tuesday morning, and then the week ahead is likely to stay cold nationwide, a windy day on Tuesday, and then winter showers through the week ahead.”
Mr Morgan said that despite a “mild” start to the month, the cold conditions are more typical of “mid-winter to late-winter”.
“What we can say is that it’s going to be very cold for the time of year, there will be widespread overnight frosts, and a few locations where there’s snow on the ground,” he continued.
The yellow weather warnings in place across the UK
Meanwhile, a yellow snow and ice weather warning that came into force at 4pm on Sunday will end at 11am this morning.
The warning covers the northern tip of Scotland and people there have been told there may be icy patches on some untreated roads, pavements and cycle paths.
The Met Office has said there is “potential” for both yellow warnings to be “escalated”.
In southern England, a typical maximum temperature for this time of year is 11C (52F), but daytime highs for the week ahead are forecast to be around 5C (41F), while some parts of Scotland will reach “only just above freezing”, Mr Morgan said.
The meteorologist said the public can best prepare for the wintry weather by checking their cars are suitable for icy and potentially snowy conditions and to take extra supplies including food, blankets and a fully charged mobile phone with them on journeys.
He added there were “likely” to be changes to the weather warnings in the coming days, and that “winter flurries” could be seen in the south of England later in the week.
Read more from Sky News:
Starmer to push for ‘pragmatic’ relationship with China
Manhunt under way for husband after woman’s body found in car boot
Keep up with all the latest news from the UK and around the world by following Sky News
Despite the cold conditions, the “whole of the UK” will enjoy more sunshine this week, the meteorologist added.
He said: “There’ll be some snow showers in the peripheries of the UK, particularly northern Scotland, and down the east and the west coast, but if you live inland and you live in the south, there’ll be lots of sparkly blue skies on the most days through Tuesday to Friday.”
It comes as a cold weather alert issued by the UK Health Security Agency, which was introduced at 9am on Sunday, will be in place until 9am on Thursday.
It covers a large area of England, north of Northhampton. The alert is triggered when there is a risk that healthcare services might face extra pressure and is designed to prepare those who are “particularly vulnerable” and “likely to struggle to cope”.
UK
Man pleads guilty to being owner of dangerously out of control XL bully which killed his neighbour near Sunderland
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports8 months agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Environment1 year agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Sports3 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business2 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway