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Farmers have "nothing to lose"-really?
My interest was piqued by a Headline in a newspaper on the @HAYSIE "Ukraine" thread. And, sure enough, lots of papers have similar Headlines claiming Farmers feel this way.
Farmers live in a different World from me. Farmers live in a different World from pretty much all of us. In particular, they live in a World where they get subsidies not available to the rest of us. Coupled with Tax exemptions not available to the rest of us. But they continue to live in a cloistered world where, every time their massive advantages over the rest of us are eroded, they threaten us all. Every. Single. Time.
Recent history should have taught even the thickest Farmer that they may not be the best judges on what may be best for their industry. Let's take Brexit, as an example. We can all have our different views on Brexit. But surely, if you were a Farmer, you would have to be financially illiterate to want to leave the EU. That lovely Common Agriculture Policy. More Grants than you could shake this year's new tractor at. Particularly those massive grants to grow stuff that literally no-one wanted. But no-farmers up and down the land demanded we leave the EU. Without once checking that any UK Govt (of any flavour) would match those grants.
So-what exactly is the Farmers gripe this week? It is change to Inheritance Tax Laws. Meaning that more Farmers may have an Inheritance Tax Bill on death. Not the massive farms-they are already Limited Companies. And not Farms worth less than £1 million-they are still exempt. Just private farms in relation to assets over £1 million passed down to children (as opposed to spouse).
Let's compare and contrast 2 typical "family run" businesses. Suppose we compare someone whose family farm is worth £3 million, with someone whose family shop is worth £3 million. For simplicity, let's ignore all the free grants that only 1 of those 2 would have received, and other tax avoidance measures/assets, and assume tax is not payable on the first £1 million.
The farm attracts IHT at 20%. That is £400,000. Which is payable over the next 10 years.
The shopkeeper's estate? IHT at 40%. £800,000. Payable immediately.
I used shopkeeper deliberately. Because the shop on a Farm is always called a "Farm Shop" for a reason. To ensure that it is an asset of the Farm. So that IHT is paid at a lower rate. Even when the Farm Shop has 95% of goods that have nothing to do with the Farm.
Why do you think Jeremy Clarkson runs a Farm? Because he knows how much Tax he would like to pay. Diddly Squat.
Farmers continue to enjoy massive privileges. If they really think they have "nothing to lose" they are even more deluded than they were over Brexit.
Farmers live in a different World from me. Farmers live in a different World from pretty much all of us. In particular, they live in a World where they get subsidies not available to the rest of us. Coupled with Tax exemptions not available to the rest of us. But they continue to live in a cloistered world where, every time their massive advantages over the rest of us are eroded, they threaten us all. Every. Single. Time.
Recent history should have taught even the thickest Farmer that they may not be the best judges on what may be best for their industry. Let's take Brexit, as an example. We can all have our different views on Brexit. But surely, if you were a Farmer, you would have to be financially illiterate to want to leave the EU. That lovely Common Agriculture Policy. More Grants than you could shake this year's new tractor at. Particularly those massive grants to grow stuff that literally no-one wanted. But no-farmers up and down the land demanded we leave the EU. Without once checking that any UK Govt (of any flavour) would match those grants.
So-what exactly is the Farmers gripe this week? It is change to Inheritance Tax Laws. Meaning that more Farmers may have an Inheritance Tax Bill on death. Not the massive farms-they are already Limited Companies. And not Farms worth less than £1 million-they are still exempt. Just private farms in relation to assets over £1 million passed down to children (as opposed to spouse).
Let's compare and contrast 2 typical "family run" businesses. Suppose we compare someone whose family farm is worth £3 million, with someone whose family shop is worth £3 million. For simplicity, let's ignore all the free grants that only 1 of those 2 would have received, and other tax avoidance measures/assets, and assume tax is not payable on the first £1 million.
The farm attracts IHT at 20%. That is £400,000. Which is payable over the next 10 years.
The shopkeeper's estate? IHT at 40%. £800,000. Payable immediately.
I used shopkeeper deliberately. Because the shop on a Farm is always called a "Farm Shop" for a reason. To ensure that it is an asset of the Farm. So that IHT is paid at a lower rate. Even when the Farm Shop has 95% of goods that have nothing to do with the Farm.
Why do you think Jeremy Clarkson runs a Farm? Because he knows how much Tax he would like to pay. Diddly Squat.
Farmers continue to enjoy massive privileges. If they really think they have "nothing to lose" they are even more deluded than they were over Brexit.
Comments
If a farmer is married, his or her spouse would be able to pass on another £1.325m tax free, taking the total untaxed amount to £2.65m.
There were 117 farms valued above £2.5m in 2021-22, according to the HMRC figures, external.
In addition, there is an £175,000 tax-free allowance on a main residence when it's being passed on to children or grandchildren. This brings the total untaxed amount for a farming couple to up to £3m.
Steve Reed, the secretary of state for the environment, food and rural affairs, confirmed the "vast majority" of farmers will not be affected by changes. Writing in the Telegraph, external, he said "only the richest estates will be asked to pay".
https://www.bbc.co.uk/news/articles/c8rlk0d2vk2o
1. I really like your meat/apples/whatever. Very tasty
2. Hope you don't mind me asking-do you also sell to a local supermarket/greengrocer?
3. And the prices you charge that retailer-is that higher or lower than you are charging me direct in this shop?
4. If that is lower, can you tell me where so I can buy your products at more reasonable prices?
On a lighter note, having lived in the countryside most of my life, thought I would share the thoughts of an ex-girlfriend the first time she visited the countryside:-
"I keep seeing these signs for PYO Plums. Are they nice, cos you never see that Brand of Plums in London"
A lot of Farmers own more than 1 farm. 1 of the "Farmers" in my area owns 100...
My understanding is also that the residence nil rate band reduces by £1 for every £2 that the estate exceeds £2 million, so it might not apply in many of the larger estates.
Most farms are also not that profitable, especially when compared to the value of the land they farm. Although payable over 10 years the IHT bill may well be the nail in the coffin for some farmers. But maybe that's the governments target so they can force more agricultural land to be sold for development? More houses and less land used to grow food, what could possibly go wrong?
The tax raid on farmers is however nothing compared to the tax raid on the pension funds of those unlucky enough to have to save for their own retirement in personal pensions rather than than benefit from gold plated final salary/defined benefit pensions that are often heavily subsidised by the rest of the tax payers. It's very easy for Labour MPs to make new laws when they know that they aren't going to be impacted by them, very easy.
One thing we may well see happen is that an awful lot of unmarried couples may get married before 2027 to avoid IHT on their unspent pension funds or farm. Although HMRC of course reserve the right to undo or ignore any contract that has been entered into with the sole or main purpose of avoiding tax! That might be interesting.
think similar might happen if you tried this.
In relation to farms. Why should every other type of business be taxed more heavily than farms? Why should people who make stuff be less important than people who grow stuff?
'Amazon, eBay, Adobe, Google, Cisco, Facebook, Microsoft, and Apple faced UK corporation tax liabilities of £297 million in 2019. That puts the total amount of tax avoided by the companies in the UK at an estimated £1.5bn in 2019, the latest year where figures exist.' Let's start with those.
New IHT avoidance scheme? Marry someone much younger, who is easily insurable, with the legal agreement that they then pass on all of your assets to your children as outright gifts. Assuming they survive 7 years there is no IHT on the gift, you take out insurance so if they die within 7 years the IHT is paid. Simples. I wonder which firm of accountants will be the first to market such an 'arrangement' ?
Your suggestion would never work. It is a contract tainted with illegality. And any Accountant/Solicitor marketing such a thing would be struck off.
Finally, would be lovely to chase the companies you mention. But it could only work if the whole world stood together as one. And that is never going to happen. Because there will always be countries who take the money and ignore other people's tax problems
His current estimated net worth is about £55 million. Which leads to a significant potential IHT Bill on his death. And so he has clearly taken advice as to how to ensure as much money as possible goes to his kids. Rather than the taxpayer. So-for example-on his recent divorce I would expect that various of his former assets were passed to his wife as tenant for life, with a residuary interest to his kids. Simply because that is a tax-efficient way to pass on assets with an extra £1 million+ tax-free slice etc.
Still got £55 million. So somewhere between £10-15 million has been invested in a Farm. He is not a farmer-he employs people to do the difficult stuff. Let's suppose that the bottom figure of £10 million is to be used for tax purposes. Let's also ignore the various subsidies, and the TV income from the Farm. And that all reliefs for IHT are swallowed up elsewhere.
Before he bought the Farm, that £10 million on death would have attracted IHT of £4 million. Until this year, the tax paid would have been a tiny fraction of that. Poor people pay taxes-so multi-millionaires don't have to.
The Law on IHT and Farms has changed. So now, instead of the former £4 million IHT being removed entirely, there is now only a £2 Million saving. With a £2 million IHT bill payable over 10 years.
Because it is only millionaires that will be impacted by the change. And only multi-millionaires that will be impacted significantly. Because everyone can avoid paying IHT on the first £1 million. And it is easy for most Farmers to avoid paying IHT on the first £3 million
This is a march. Where millionaires and multi-millionaires are protesting that is unfair that they should be expected to pay IHT at half the rate of everyone else.
I don't blame anyone for wanting other people to pay what should be their share. What staggers me is the sense of entitlement when a tax avoidance loophole is halved.
Clarkson bought his farm in 2008. For £6 million. Started claiming he was the Farmer (as opposed to the people he employs)-in 2019. About the time he wanted to make some money from a TV programme. Because that is what he does for a living.
Farmers are "asset rich and cash poor"? So is someone with a £2 million house and £2,000 of other assets. Like tens of thousands of elderly houseowners. Are they hit with IHT? Of course they are.
Farms have had this blanket exemption for 40 years. They managed to stay in these snowflakes' families for generations when their forebears did pay their fair share of tax.
There are hundreds of different types of rural businesses. Why should farms be a special case?
@HAYSIE makes a simple point. Why should a £3 million exemption not be enough? Anyone think they can get £3 million in salary before tax starts?
It’s just a land grab by labour..
they’re Cash poor asset rich
Ma own family can’t afford to fix part off the farm house on a 98 acre farm the out buildings all leak .. half ma family run small farms .. they’re kids and wife’s all live in the farm houses as they can’t afford to build them houses off there own .. it’s robbery sick robbery.. if they have to pay that they’ll be homeless..
But that could be Labours plan
As they can’t sell for half the valuation off there land and property unless they sell to developers.. who are offering a third off the price their lands worth talk about stuck between a rock and a hard place … growth already stagnant.. food prices go up because off this … god help the old folk if that happens.. but they should strike .. like all the unions do they might get a 35% pay rise .. not .. but if they do strike food prices will rise a lot and labour will be to blame.. clueless clowns..🤡
And it is not "like your family having to pay 20% of the value of the Property". Almost everyone who is not a farmer pays 40%. Double. Once an estate is worth over about one third of that of a Farmer.
Farming is a business. Just like every other business. That runs at a profit. Or doesn't run at a profit. That has running expenses. That sometimes fail through market forces that are in no way the fault of the businessmen concerned. Welcome to the real World.
If individual members of your family are worth less than £3 million, they may well have no inheritance tax to pay on their estate, provided they take advice. And if someone dies worth more than £3 million as a Farmer, good luck to them and the person who inherits.
Just pay tax.
From each according to their ability.
To each according to their need.
A farming couple can leave a £3million estate without paying a bean in IHT.
A normal person cant do that.
My Dad left me a property.
I paid a bit of tax on his estate.
Assuming I leave the property to my daughter she will also pay IHT on the same property providing my estate qualifies.
And I dont get anywhere near £3million tax free.
The allowance for a farming couple is almost 10 times as much, and they have to pay half the rate of tax.
If that is unfair on anyone it is surely your average man on the street.
£325,000
For a normal person, the inheritance tax (IHT) allowance is £325,000, known as the nil-rate band. The standard IHT rate is 40% for anything over this threshold
For farmers, the first £1 million of combined business and agricultural assets is fully exempt from inheritance tax. However, assets exceeding this threshold will receive a 50% relief, leading to an effective tax rate of 20% on amounts above £1 million
For a couple this figure can increase to £3million as per the above articles.