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The inflation of agriculture land prices is not all to do with the Clarksons of the world. If you own an inherited 100 acres at £1000 per acre (1995) it was worth £100,000 and this forms the basis of what you can borrow against. However if that land is worth £10,000 an acre that's £1m. So you can borrow £100,000 to buy another 10 acres no questions asked. Your land is now 110 acres which you have a mere £100,000 debt against a £1.1m asset...
It's a ponzi scheme and it's now biting them in the arse. If agricultural land drops back to £2000 a acre they are pretty much insolvent hence the wider crys of woe in the Farming community. Just for ref. my accountant has 9 Farms on his books and this is his take on it.
As with most things at the minute this has clearly become very polarised (as the thread title I guess predicted). It’s quite hard to argue that the tax loophole shouldn’t be closed, but I think the issue is that it’s been brought in quite fast. A proper consultation and developed policy should be able to address the tax issues whilst maintaining or improving viability and quality of farming.
I kind of feel like giving a handful of rural land owners four decades to hoover up assets and pass them on IHT free was a pretty good deal while it lasted. The fact that the proposed rate is lower and they get a decade to settle the bill (unlike most other "family businesses") seems like a softer landing than many would get. Plus the opaque way some of that land seems to move from agricultural use to housing or industrial development is another thread that I'm sure some land owners might not want pulling on.
Ultimately do you really think they're pissing off many die hard Labour voters with this? I'm surprised SKS/RR have given them such cushy terms TBH, they'll gain nothing for it...
Most of this thread has descended to calling all farmers sponging tax avoiders which is hardly constructive, and is drawing drawing attention away from the likes of clarkson, Dyson and all the dukes.
Context is the thing, the rhetoric from both main parties for some time has been about austerity and financial suffering for all, lots of businesses in various sectors have gone to the wall. While I think we all recognise the supermarket's role in the margins and profitability of UK farming, if the "agricultural community" really wants to test the temperature of wider public sympathy around handing on multi-million pound assets to their kids IHT free, they may well discover they're not universally supported...
There's lots of little pockets of privilege in the UK that all need challenging, I guess it's now government policy to do this one group at a time. No doubt people will remember which groups threw their toys out of the pram, and which took it on the chin (or just quietly went about finding new potential loopholes)... To quote David Cameron "We're all in it together", lovely sentiment, utter bullshine...
It’s a ponzi scheme and it’s now biting them in the arse. If agricultural land drops back to £2000 a acre they are pretty much insolvent hence the wider crys of woe in the Farming community. Just for ref. my accountant has 9 Farms on his books and this is his take on it.
Now that makes sense, if you've borrowed 700k against your land to buy a new combine, or 250k to buy livestock (as mentioned earlier in this thread). If you default on your loan, the bankers won't be happy when they try to recoup funds.
Indeed. Unlike in that Richard J Murphy video… farmers can’t weather a huge drop in land prices any more than a company that owns commercial property can weather a huge drop in office and warehouse pricing (this is what happened to the Coop… lots of wise investment in property… ‘till the wisdom proved to be folly). The “problem” might be asset inflation, but the fix for farmers isn’t to make their assets lose value at speed. This tax change for large estates should help arrest the rise in land values, but it’s unlikely to result in any major downwards correction.
I mentioned further back up the thread that lots of Farmers I know built "agricultural cottages" for family on lots of borrowed money leveraged on the "asset"
One of these cottages was a six bed four bath house for one of the sons...... £500k build, less the VAT naturally and off set against the tax bill.
Nice bit of profit minimisation there.
One of these cottages was a six bed four bath house for one of the sons…… £500k build,
We've had similar around here, I can think of at least two farms, and one equestrian estate which pushed through 'agricultural workers' homes on planning and then family moved in.
Inheritance tax frightens the life out if many Farmers for the reasons above, many are running insane borrowing and overdrafts and servicing the interest payments hoping that in 100 years that £1m debt is buttons.
Ultimately do you really think they’re pissing off many die hard Labour voters with this? I’m surprised SKS/RR have given them such cushy terms TBH, they’ll gain nothing for it…
Agree, should have just done the full IHT that everyone else has to pay. However he impacted farmers any that voted Labour would be anti Labour so nothing to lose if you are going to do anything at all. Full impact then move on, nobody will care about it in 5 years time. Someone is always going to be unhappy when imbalances are corrected / privileges removed.
It would probably be worth the Gov or even an independent body putting a few ads on the telly setting out some simple facts around key policy decisions that affect citizens to counter the huge swathes of deliberate misinformation that is put out by vested interests.
I don’t think having a minister trying to hold a defensive line on BBC breakfast is really going to cut through the noise.
Or the farmers talking to their accountant/tax advisor like anyone else who are sat on x-million worth of something.
We’ve had similar around here, I can think of at least two farms, and one equestrian estate which pushed through ‘agricultural workers’ homes on planning and then family moved in.
Well, my point about red diesel wasn't entirely without first hand experience either.
I went out with a farmer's daughter in my late teens - the farmer, his estranged wife (who still lived in the actual farmhouse with the kids), his new woman and the eldest daughter (my girlfriend) all ran their personal cars on red. I think he packed it in when he came to the attention of police after indulging in his other main hobby of getting pissed and starting fights in pubs once too often.
This was nearly 30 years ago, mind.
IME HMRC has always kept a close eye on red diesel.
My family were butchers who bought stock "on the hoof" from various farmers markets.
They were often dipping tanks of various Land Rovers and Range Rovers at the markets.
This was 40 years ago, not sure if they still have the resource?
There is a large farm near me that developed a lot of ex-agricultural buildings during the aftermath of foot and mouth. They received a lot of grants and supports to do so. They now have a thriving holiday business on top of their farming. More recently they received a grant to redevelop another building that wasn't what they said it was. Someone found out and dropped them in it, they were forced to sell up and repay the money. Don't understand why they weren't prosecuted for fraud?
No sane person would ‘hold hold onto stock’ or invest millions into something that might make you a 1% return*.
But it doesn't does it.
circa 2000, one acre was £3.5k
circa 2024, one acre is £10k
ROI of land itself is, what, 6% (ish)?
The profit in actual factual potato growing and cow milking doesn't seem worth getting out of bed for - but the landowners have been laughing all the way to the Cayman Islands for quite some time.
It's only a return if you sell it.
kind of like every other asset then?
also as noted earlier in thread, its collateral for loans, too
kind of like every other asset then?
No not at all.
I have invested in assets that return a profit every year.
I could sell them and make more profit in the short term, as I have added value to them but more happy to keep them and let them generate a decent return from the work I put into them.
I still don't understand how assets that generate so little revenue can have such a high valuation?
I still don’t understand how assets that generate so little revenue can have such a high valuation?
When tax advisers to the wealthy "discovered" the complete lack of IHT for farms they advised their clients to invest in land and to pretend to be farmers. This drove the price up as we live on a small island and land is scarce (so they would have you believe).
When tax advisers to the wealthy “discovered” the complete lack of IHT for farms they advised their clients to invest in land and to pretend to be farmers. This drove the price up as we live on a small island and land is scarce (so they would have you believe).
It still makes no sense.
It's almost like the 17th Century Tulip Mania.
I still don’t understand how assets that generate so little revenue can have such a high valuation?
In an undistorted market, they wouldn't. Land would be priced to reflect the return, like any other asset. And I guess in a way, it still is - it's just that the return comes from the tax exemption, rather than working the land.
This drove the price up as we live on a small island and land is scarce
Well they're (whoever that is) not making any more and in the East we're losing land.
I hadn't quite realised just how much Farage had actually raided the dressing up box when he joined the protest. Do farmers genuinely not see this as anything other than Farage just taking the piss out of them?
I guess it’s now government policy to do this one group at a time.
Off topic I know!
I imagine private landlords will also come under some more scrutiny at some point. A colleague on mine is has a 'portfolio' of rental properties. He doesn't take any income from them, just 'reinvests' by securing loans against the income of the property purchases another one. I did say to him aren't you worried that you may fall foul of IHT when you cash out or leave them to you kids. No he says. He has set up a limited company and his wife & kids are share holders so will only pay IHT on his shares that are handed over instead of the whole business.
The Tax system is crooked towards the asset rich, have a business that doesn't make anything, borrow large against it and it looks like you don't make any thing so the tax bill is negligible.
Back on topic,
I imagine the small family farmer is feeling some despair at the moment. For me the big problem is the big guys will already have a way around IHT because nothing will be passed over as inheritance.
The Tax system is crooked towards the asset rich, have a business that doesn’t make anything, borrow large against it and it looks like you don’t make any thing so the tax bill is negligible.
But isn't your example the same for any business seeking to expand? No wages are taken and the income is being re-invested to service growth. Presumably there'd be less opprobrium if it was a widget factory using profits to service debts on new widget machines?
i think the crux of this could be solved by a differentiation of the term
"Farmer" and "Land owner".
They are not the same, obviously
Just had to venture into the worst hive of scum and villany on the internet, LinkedIn (spit spit).
I saw in passing a comment thread containing "I will be impacted by this, as will many of my neighbouring farms"
The guy is the MD of some scientific equipment manafacturer. He might own the land, but i dont think you have time to be farming all hours of the day, AND be the head honcho of a business in an entirely different industry (or field, if you like a pun) (And posting inspirational nonsense on LinkedIn)
I hadn’t quite realised just how much Farage had actually raided the dressing up box when he joined the protest. Do farmers genuinely not see this as anything other than Farage just taking the piss out of them?
Well the fat bloke and the East 17 wannabe seem to be laughing at him!
I think Farage has decided to piggyback off the backlash to Jaguars "woke" advertising campagin instead now. Got to keep pushing those culture wars!
I saw that both Farage and Tommy Robinson are outraged by Jaguars new rebrand. I reckon Jaguar have only done it as an absolutely priceless piece of gammon baiting. I imagine the crossover from the protesters the other day and owners of JLR products will be about 98%
If you’ve somehow not seen it, sit back, enjoy and picture the Barbour jackets and Hunter wellies exploding with rage 😀
@Olly that's multi-tasking (or for the details type doing many jobs poorly instead of one properly).
Are Jag and Land Rover still one and the same?
JLR, Do the same with the LR range! PLEASEEEE!!! it would be hilarious.
Part of the media hysteria becomes very easy to understand when you learn that Jonathan Harmsworth, the 4th Viscount Rothermere, aka the owner of the daily Mail owns 4,700 acres of farm land that he rents to tenant farmers. I bet he has scurried off to his tax advisors. Nothing like riling you readers into supporting your campaign to parent the closure of tax avoidance options
It still makes no sense.
What you should ask is why has "becoming a farmer" become so popular over the past thirty years, so as to drive up land prices at twice the annual rate of house prices? You though houses had appreciated rapidly? About 3.8% per year. Land has been double that. Farming seemingly is a very desirable profession to enter. For farming, read land owning. You could even grow tulips and hope for another bubble!
I don't know anyone who has "entered" farming in the last 30 years, it's financially impossible. The Farmers I know will never sell their farms - they know nothing else and have very little transferable skills. They are also "Farmers" that is their self identy if they stop farming they become nothing. For many if they sell the farm they will be judged as failures.
Many are quite sad individuals locked in a life of farm, mart, pub. I think the high suicide rate in some cases stems from this.
Some I know live in shit holes, drive a landrover and their annual holiday is a day at the great yorkshire show. Not short of money just don't know how to enjoy it.
The people who’ve had everything their own way for the last 14 years really don’t like the interruption to their gravy chain, do they?
It does however show their arrogance to expect any kind of public sympathy for multimillionaires having to pay tax like everybody else. And by default and because they’re one of the same, the Tory party have hitched themselves to the wagon of the millionaire landowners
Its almost as if the Labour Party chose to have this this particular fight to make a point.
Just read this article, and I’m wondering how to reconcile the demands that hedges, some of which are centuries old, that are hugely important to the health of our natural environment, and which are left to farmers to maintain, should have more spent to restore decades of damage, but the government wants to take huge amounts of money from those inheriting the land, so how are they supposed to find the money to run the farm, and on top pay for specialists to help advise on the restoration. Proper hedge-laying, which often has different techniques unique to different regions or counties, is a skill that takes years to learn, takes a long time to do properly, and isn’t cheap.
It seems to me that, in leu of the duties going to the government, they should be used instead to help with this crucial restoration process.
I think Farage has decided to piggyback off the backlash to Jaguars “woke” advertising campagin instead now. Got to keep pushing those culture wars!
If the bolshy farmers believed for one second that Farage wouldn't drop them like a hot brick the second something else came along - well, they're even dafter than it first appeared.
Farage was the prime mover behind convincing then to vote to cut their own throats financially, FFS.
The Richard J Murphy vid is pretty good, TBH. Probably pitched at the right level. It totally misses off in-year costs of production, though - commodities that have skyrocketed in price in the last 2-3 years. Feed, fertilisers etc. But his basic point holds - the actual margin on the actual activities of farming are not sufficient.
FWIW, many farmers do 'hedge' against commodity prices by buying in bulk and when prices are lower. But the commodities themselves are often perishable and the 'hedge' is usually at the level of a handful of farms. Looked at objectively, they are still at the mercy of commodity prices.
Murphy nails it, though. The use of farm-able land as a financial instrument (its worth in this case being in its tax avoiding ability), squeezed margins from onward supply chains (Tesco keeping very quiet at the moment), and Brexit (loss of exports, squeeze on seasonal labour and end of subsidies) - these are where their anger should be directed.
Hell, if they put it like that, they'd have the support of 85% or more of the population!
Hell, if they put it like that, they’d have the support of 85% or more of the population
Most def, but the spin being put on it by the usual suspects is ‘labour bad’ the farmers anger should be directed at the actual problem.
It seems to me that, in leu of the duties going to the government, they should be used instead to help with this crucial restoration process.
I think the question of how to farm without destroying the environment and while allowing farmers to make a reasonable living deserves a thread of its own.
Farage was the prime mover behind convincing then to vote to cut their own throats financially, FFS.
It’s probably not fashionable to say it, but you might be surprised to learn that farmers voted for Brexit in much the same way as the general population; older and less educated, and dairy voted leave, younger, more educated cereal farmers voted remain. The overall vote wasn’t so different to the 52/48 split. The NFU was in favour of remain.
(Tesco keeping very quiet at the moment),
Aren't Tesco one of the biggest landowners in the Country?
Not sure if they own "farmland" but they certainly were buying everything up a few years ago.
It’s probably not fashionable to say it, but you might be surprised to learn that farmers voted for Brexit in much the same way as the general population; older and less educated, and dairy voted leave, younger, more educated cereal farmers voted remain. The overall vote wasn’t so different to the 52/48 split. The NFU was in favour of remain.
Hence my reference to 'the bolshy farmers'. I believe the farmer vote for Leave was slightly higher than the general population (closer to 60 than 50), but the point is moot.
But I reckon that crowd on Tuesday contained a disproportionate number of that farming, Leave-voting demographic. Why wasn't Farage booed?
I think the question of how to farm without destroying the environment and while allowing farmers to make a reasonable living deserves a thread of its own.
Cirtainly - food, where it comes from, how it's produced, packaged, marketed and sold is possibly the biggest modernization failure with huge impacts on the environment & public health. The 'custodians of the land' is absolutely complete BS for the vast majority of farms.
I've just read that Farage was actually excluded from the list of speakers at the farmers demonstration over fears he would get a hot reception for his role in Brexit.
This is a bit embarrassing for our Nige, so you would think he would do the decent thing by shutting up, right? Err, no. He's now claiming that the leaders of the farmers were the cowards who were nobbled by the Tories(!)
Ah, one of the few things the professional shit-stirrer has left at this point - attempted divide and conquer. Let's hope the majority see this for what it is.
And if all else fails, Nige can wrap himself in a Union Jack and say something disparaging about foreigners.
The cynical slob.
Had a couple interesting conversations with a rural accountant and a farmer today.
Regards the 7 year rule, if a son/daughter and farther/mother who all work the family farm but live in the same house / farm. When the parents hands down the farm, the farther then has to pay rent to the son at full commercial value of the property as it's become a benefit in kind...
Had a farmer in the shop today who is just over the cusp of the iht bracket, they are landlocked by other bigger farms and landowners and would like to expand but can't afford the land even if it were available. He was quite happy for his dad's to start thinking about handing over the reigns of the land sooner, but wasn't aware of the above clause in the 7 year rule.
Seems like a bit of legislation that needs removing to me (and pretty quick)...
Regards the 7 year rule, if a son/daughter and farther/mother who all work the family farm but live in the same house / farm. When the parents hands down the farm, the farther then has to pay rent to the son at full commercial value of the property as it’s become a benefit in kind…
The son could then provide a loan form the business to his dad to pay for it. As it’s a loan it’s not taxable. The loan can written off at some point in the future consequence free.
If your rural accountant can’t see some fairly obvious routes through that then they need to hand in their calculator.
Was thinking the very same thing.
pay rent to the son at full commercial value of the property as it’s become a benefit in kind…
The same for any parent handing a house to a child. If you continue to derive benefit from an asset, you have not given it away so it is still subject to IHT and part of your estate. I’d be surprised if you can give things back via a loan. I imagine HMRC have something to say about such arrangements as gifting houses is not an uncommon desire. A better option might be to make the parent an employee of the farm abound pay income. You can’t do that for a parent, but they will have to pay rent if they still live in the house. That rent could be viewed as inheritance paid now, if the parent has the income.
Using loans that aren’t then repaid is a very common tax avoidance route taken by many company owners. If the loan recipient defaults and doesn’t repay the loan there are no consequences unless the company taxes action to recover the debt. Of course this doesn’t happen. HMRC can’t do anything to stop it as it’s legal and requires government legislation to close the loophole
AIUI you do have to pay tax on the loan (unless it’s for a very small amount).
It may still be more tax-efficient than other ways of taking out money especially if you’re a higher-rate taxpayer.
I'm wondering how many of these farms which earn a profit of £25-£30k a year employ an accountant at £500 a day to do the books and financial planning.
Another interesting watch by the professor
Regards the 7 year rule, if a son/daughter and farther/mother who all work the family farm but live in the same house / farm. When the parents hands down the farm, the farther then has to pay rent to the son at full commercial value of the property as it’s become a benefit in kind…
And you thought it would work how exactly?
I guess I assumed that as lots of media and commentators are saying 'just use the 7 year tax rule' if would be simple...
I guess the farmers could hand down the working part of the farm or land, but not the property to get around it now though, or maybe not a wing of the property as is the case around my way.
I’m still waiting to see if it is a possible 5 million tax relief or if the professor has got it wrong.
Regardless the more you look at farming you can see it’s absolutely bat-shit crazy as a business in its current state unless your using it for other reasons (Tax avoidence or a successful TV series.)
I’ve seen Clarkson got 200 million for his series so that is a pretty good return on the land 🙂
I see the farmers are back in London with their tractors. I note that if eco-protesters were blocking the capital's roads like they are they'd all be locked up and everyone would be wailing about ambulances being held up. God forbid they should have to abide by the same rules as the rest of us.
Are they blocking the roads?
Very few of the eco protestors actually got locked up but I agree all protesters should be treated the same way
Very few of the eco protestors actually got locked up but I agree all protesters should be treated the same way
But when they did they got very severe sentences.
One bloke got 5 years.
Imagine if they locked a poor multi millionaire farmer up, even for a month?
Very few of the eco protestors actually got locked up
https://juststopoil.org/court-prison/
What the difference between this and blocking the roads with slow moving tractors?
I was in London this morning. Tractors aren't slow moving, they're pretty quick when they floor it and are at least as quick as any other central London traffic. Those I saw around Marble Arch weren't blocking any roads, just driving, tooting their horns and enjoying their day trip to that London. A pretty incongruous sight amongst the Ubers, black cabs and couriers, but they weren't holding anyone up.
Yeah of the footage I’ve seen they’re just driving like normal traffic, I have no issue with either party protesting but let’s not make stuff up.
All these poor farmers travelling such large distances in such inefficient vehicles every two weeks. Clearly the red diesel subsidy is way too generous.
its not even front page news. they had their moment and it seems that no one really cares about the millionaires... 😉
Clearly the red diesel subsidy is way too generous.
As I understand it you can only use red diesel on the road if they are travelling between farming locations.
HMRC should dip a few tanks and get a few fines issued.
More tax dodging by the millionaires.
Very few of the eco protestors actually got locked up but I agree all protesters should be treated the same way
I'm reading 'locked up' as an expression, not actually meaning put in prison. Quite a few eco-protesters have ended up in court, and with criminal records. The tractors may not have blocked traffic in London - that would be difficult anyway with the average snails pace of traffic there - but when they've protested down here (over fuel charges?) they have deliberately blocked main roads, which is ironic when you consider what the two camps represent.
They were out this morning at rush-hour on A14 driving East towards Felixstowe causing congestion, delaying ambulances and people heading for medical appointments. Hopefully there will be some arrests for inconvenient protesting like JSO.
A bunch of tractors all with signs on them saying STARMER THE FARMER HARMER and NO FARMERS, NO FOOD all driving around Matlock, Chesterfield, Bakewell today.
They did broadly seem to be obeying the traffic laws though. Impressive that they're all working 14-hr days, hand-to-mouth operation yet have a few hours to spare to drive around Derbyshire.
They did broadly seem to be obeying the traffic laws though. Impressive that they’re all working 14-hr days, hand-to-mouth operation yet have a few hours to spare to drive around Derbyshire.
You understand that watching the seeds sprouting and watching the lambs fatten minute by minute isn't actually how farming works?
isn’t actually how farming works?
Seems to me the way farming works is trousering massive subsidies from the taxpayer while not having to pay much back in tax. I get that farming is a 'strategic' industry but so was coal and steel and tory govts never had any problem getting rid of them. Maybe that's Starmer's plan? Engineer a battle with tory farmers and landowners to boost his 'son of a toolmaker' working class credentials and keep the non-farmer community on side?
I’m still waiting to see if it is a possible 5 million tax relief or if the professor has got it wrong.
He got it wrong as usual
From 6 April 2026, the full 100% relief from inheritance tax will be restricted to the first £1 million of combined agricultural and business property.
I get that farming is a ‘strategic’ industry but so was coal and steel and tory govts never had any problem getting rid of them.
I mean, the protests were/are called No Farmers, No Food for a reason.....they're going to have to keep on farming if we want food!
As stated earlier in the thread I'm doing my PhD on the farmer protests.
Point of order; the farmers had agreed today's protest with the police in advance, including the agreed route to travel through London after the gathering in Whitehall....they, like everyone has to, gave the police a minimum 3 weeks advanced warning and negotiated what happened. Thus, they aren't liable to get arrested.
JSO deliberately practice NVDA/civil disobedience. Disruption, law breaking and getting arrested is part of their modus operandi.
I think the government should propose increasing the farmers inheritance tax in line with everyone elses. That will shut them up.