Last-ditch Budget appeal: Scrapping property relief ‘would destroy family farms’

About 40 per cent of land on the average farm in Yorkshire and the Humber would need to be sold to fund inheritance tax liabilities if the government announces agricultural property relief has been scrapped next week, it has been claimed.

After months of mounting speculation, farmers leaders and landowners groups have issued last-ditch pleas to the government not to make major changes to agricultural property relief as part of the Autumn Budget on Wednesday, warning such a move would “destroy family farms” and jeopardise the country’s food security.

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The CLA (Country Land and Business) is urging farmers to wrote to their MP ahead of what is being described as a “parliament-defining budget” by Chancellor Rachel Reeves, amid fears agricultural property relief (APR) and business property relief (BPR), will be scrapped or capped.

Currently, APR allows working farms to be passed from the principal farmer upon their death to the next farming generation, by making such businesses free from inheritance tax as long as they are working farming businesses.

Under potential government plans, smaller and average family farms face having to sell land to fund inheritance tax liabilities.Under potential government plans, smaller and average family farms face having to sell land to fund inheritance tax liabilities.
Under potential government plans, smaller and average family farms face having to sell land to fund inheritance tax liabilities.

While recent Government statistics show Yorkshire’s farming income dropped by some £63m last year, across the UK 17 per cent of UK farms are failing to make a profit and 59 per cent made a profit of less than £50,000 in 2022/23, leaving little room for paying inheritance tax.

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Without reliefs, for the average 230-acre farm in Yorkshire, the CLA says about 40 per cent of the farm’s land would need to be sold to fund inheritance tax liabilities.

A recent CLA poll of more than 500 farmers and landowners found that 86 per cent of respondents said it was likely some or all of their land would have to be sold upon their death, if reliefs are removed. More than 90 per cent said it would damage the UK’s food security.

CLA President Victoria Vyvyan said: “If the government rips the rug from under hard-working farmers by removing these reliefs, it would be a catastrophic betrayal.

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CLA President Victoria VyvyanCLA President Victoria Vyvyan
CLA President Victoria Vyvyan

“Someone inheriting a family farm from their parents might be forced to sell up to 40 per cent of it to pay the inheritance tax bill. If five per cent of farms have to sell at their next point of inheritance, 27,000 holdings face going out of business.

“In many cases it would be the end of the family farm and a hollowing out of rural communities, stifling rural entrepreneurialism. For generations, people who own land have considered themselves temporary custodians, to pass it on to those who will follow. It inspires long-term thinking like tree planting and stewardship and a quiet acceptance that those who make the decisions will never see the fruits of their labours. If these reliefs are scrapped, it will upend it all.”

NFU analysis of APR suggests that scrapping it would only save the Treasury £120 million per year, while the negative impact on farming would be much larger.

Impact on farming businesses

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Branding the potential government move “a family farm tax”, NFU President Tom Bradshaw added: “Major APR changes would put at risk many farming families’ succession plans and consequently undermine the government’s own ambitions for food and environmental security. Farming is often a generational business, and APR is what makes it possible for small family farms to pass from one generation to another. I’m also very concerned that changes would damage the tenanted sector, as landowners will have much less incentive to let land to agricultural tenants.”

last beyond the government's first year in office.”

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