IHT Change Doesn’t Come Close To Protecting Many Family Farms

The small change to inheritance tax (IHT) for farm businesses is nowhere near enough to protect many family farms and does nothing to remove the cruel impact of the policy on elderly and vulnerable farmers, says the NFU.

Since changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) were first announced, there has been mounting opposition to this family farm tax. More than 275,000 members of the public have called on the government to make changes; trade associations representing 160,000 family businesses wrote to the Chancellor calling for reform to the policy; MPs from across the political divide have told the Chancellor about the impact it will have on the rural communities they represent; and independent tax experts have suggested changes to make it more targeted. 

The Chancellor announced a small change to the rules which will allow those farmers who are married, or have deceased spouses, to transfer their inheritance tax allowance to one another if one of them dies having not used their allowance. 

NFU President Tom Bradshaw said: “It’s good to see the government accepts its original proposals were flawed. But this change goes nowhere near far enough to remove the devastating impact of the policy on farming communities."

“It’s only right that agricultural allowances can be transferred between spouses and it’s something we’ve been calling for, but it doesn’t go anywhere near far enough in protecting the working people of the countryside. It does nothing to alleviate the burden it puts on the elderly and vulnerable."

“It is also a huge smack in the face to the Labour MPs who have been working so hard to find a way through this for their local farmers. To them, we say thank you."

“The Chancellor said she wanted to ‘back working people not make them poorer’ and to ‘increase investment not cut it’. To do that, government must look again at the multiple solutions that have been put forward by industry and tax experts.”

The minimal movement on the family farm tax comes alongside a range of other announcements in the Budget that could increase inflationary pressures on our food system. 

Mr Bradshaw continued: “Several other announcements in the Budget will hit farming and growing businesses hard. The increase in the National Living Wage, which will have risen 12% in two years, puts further cost pressures on agricultural and horticulture businesses and further inflationary pressures on our food system. At a time when the government has an ambition to get the country eating more fruit and vegetables, it will hit the horticulture sector hardest."

“The increase in the autonomous tariff quota (ATQ) for sugar cane undercuts British growers at a time when this government says promoting growth and investment at home is its priority."

“However, we believe farming may benefit from the announcements on apprenticeships and it could help bring the next generation into our food and farming sector. "

“Public support over the past year has been incredible. We will need this support to continue from all sides to create the change needed to protect those people caught up in this unjust, unfair policy. The fight continues; we cannot give up and we will work with the wider industry, supply chain and MPs on next steps.”