Simple solution make her daughters equal partners in the farm now. That way only 1/3rd of its value will be within her estate when she dies. If the farm is worth £4m her share is £1.33m. She has her personal IHT allowance plus the £1m farm allowance, this should mean there will no tax liability.
One possible way to do this would be to increase the IHT rate to 40% as it is on all other assets but then give an exemption to any farm which has been owned by a family for at least 25 years and remains farmed by that family for at least ten years after the death of the owner. You run this alongside the removal of the right to pass on land as a gift to avoid IHT, then you will be protecting the family farm at the same time as making it a waste of time to buy farmland as a tax avoidance scheme. This will significantly reduce the value of farmland, bringing it back in line with the productive capacity as a farming asset. Family farms don’t lose out as they are not going to sell their land, indeed they might be able to buy more land. New entrants to farming will be able to buy their first farm and tenant farmers might be able to buy their farms from the speculators who have bought up large chunks of land to avoid IHT obviously there will be flaws in this argument but as a direction of travel it must be good for the vast majority.
If you look at individual farms, many of them are doing everything they can to improve profitability, through things like diversification and getting involved in the processing and retail of their produce. The problems of high input costs and low output prices remain though. Farmers complain about that all the time. Government intervention could make some difference to that. But as this doesn't appear to be forthcoming, being concerned about a measure that has the potential to eat further into their income isn't surprising.
Yes, exactly. This is similar to what I suggested the other day- you only apply the tax relief when the farm is passed to a third generation. Not as well a thought out plan as your's but with the same intended effects.
No because the price of farmland will fall if it is not being used as a financial tool to avoid IHT. The value will be based on the return the assets can make, not the speculative value caused by the abuse if the IHt rules. it is estimated that if the value of farmland were to be inline with the return it brings it would be less than a third of its current value.
It will fall but I'm not sure it will, overall, fall in line with the agricultural return it brings. The price of farmland is also subject to the fact that at least some of it can be used for other things, such as development. Surely this means that the average cost will level out at slightly above what it's output is worth?
Like I said, you would have to win the lottery first. My mates just sold 200 acres at £12.000 so that would be £4000 an acre. £1.8 million A viable arable farm is probably 4 to 500 acres A combine, 3 tractors, trailer's, ploughs, drill, rotavator, harrows, rollers fertiliser spreaders etc etc You probably need 3 lottery wins to be fair
Even if it is, as you say slightly above the output value, and you are right the possibility of housing development will increase the commercial value in some areas, its value will fall significantly. The issue of land banking which is behind at lot of the problems in the housing market is a separate one and needs to be tackled as well. There are always unintended consequences of any change. But change we must.
Think that's where the choice on asset disposal comes in. If the land retains enhanced value due to uses other than farming, then the benefit of inheriting that land is clear - and, in my view, so is the obligation to pay an appropriate level of tax. Again it comes back to the yield on farming for me. And beyond that, there is a societal discussion coming about what the UK should prioritise - which we're all miles away from being able to have dispassionately. Eating locally produced and relying on family farmers is a pleasant idea - and would hopefully be retained as a tool in diversifying the supply of food that we require as a nation. However, excusing the pun, all of our eggs in one basket isn't a good idea to protect the UK for the future. There's a future world where we can't produce locally at a price we can afford.
Genuine question: where does the estimate that land prices will fall to less than a third of their current value come from?
Does anyone know how many farmers rent there properties from the large landowners as most of the farmers l have known this is what happens . If they were able to buy land at a reasonable cost , which they can’t afford now surely that would be a good thing .
Quick Google search bring this up from the government's website. There will, no doubt, be other figures out there. In England in 2021, the majority of farms (54%) are owner occupied, followed by 31% mixed tenure and 14% wholly tenanted.
Assuming you aren't being facetious, it's societal health, education, defence, innovation, food security, social security. It's basically everything. Talking specifically about farming does a future UK have the luxury of being able to care about family farms? Or is it just important that someone farms the land - even if it is industrial farming by a faceless conglomerate? Do we even need to have a farming sector if we can import food securely at much cheaper prices? It's a nice thought that we can maintain aspects of what went before, but we don't go down the pits or build ships any more. Fundamentally, what is the most viable future for an island nation that no longer has the military might to impose its will on the RoW?
What this amounts to is that farmers want subsidies in other words, not unusual ... ... but the majority will still have that, the most rich may be affected but that's life. If people really believe they'll be forced out of farming they should sell up and retire before this Tax affects them. That won't happen because all this rhetoric about farms being killed off, and families being impoverished, is bluster. This romantic illusion that they're battling the odds to feed the nation is nonsense imo, it's a business just like any other. If their sons and daughters don't wish to pay the inheritance tax they don't have to, just get a job doing something else or work on a farm if that's all they're capable of. In my experience the wealthy top end of farmers aren't out in the fields, in all weathers. They get become involved with the busy times, like lambing and harvest, but the rest of the time they're working on other businesses, in the City, or wherever. Anyway, that's said everything I have to say ... ... I only really came on to say the farmers had make a serious error of judgement having Jeremy Clarkson as their poster boy. Other people, including those involved, have been saying the same thing. It was hilarious, on day one, that he was so totally embarrassed by Victoria Derbyshire. Despite his 'high principles' and 'great support for the poor farmers' I doubt he'll be so keen to pop his head above the parapets from now on.
31% are mixed tenancy which, I believe, means they own some land and rent some land. Pretty much every farmer I knew as a kid did that.
Who the **** would have thought this topic would stir up this kind of impassioned debate on this forum. What an eye-opening read. Not something I would have expected at all.
