The proposed changes to inheritance tax could jeopardise UK farming businesses if implemented
The UK farming industry has written a letter to the Chancellor of the Exchequer to warn of possible changes to inheritance tax (IHT) as fears continue to grow.
According to the National Farmers’ Union (NFU), alterations to IHT, which includes axing Agricultural Property Relief (APR) and Business Property Relief (BPR), would have a crippling impact on family farms, tenant farmers, domestic food security and environmental delivery.
APR is an essential relief for farmers who rent land as part of their business model, with 64 per cent of farmland occupied by farmers who rent some or all their land.
Under current succession law, APR and BPR allow working farm businesses to be passed on to the next generation of farmers without incurring any inheritance tax charges.
However, if these are both cut, farms would likely be unable to pay the IHT fees without selling those businesses completely.
As a signatory of an urgent letter sent to Chancellor Rachel Reeves, the NFU is concerned about recent speculation that IHT reliefs could be reviewed by the government.
The association believes changes would be in direct conflict with the commitment Defra Secretary of State Steve Reed MP made last year, that Labour “have no intention of changing APR.”
The NFU has been making the case to the Treasury for several weeks about the detrimental impact of a decision to change APR and BPR could have.
NFU president Tom Bradshaw said that any changes to APR and BPR would have “devastating” impact on British farming.
He commented: “Changes to vital IHT reliefs for farm businesses don’t only threaten our food security, but also the shared ambition with government to protect and enhance our environment.
“It’s hard to see anything which would destroy the new government’s relationship with farmers more completely, or do more damage to family farm businesses, be they the owners of farms or the tenants who farm them for the landlord.
“Whether that’s large or small family farms, tenant farms or contracting businesses, almost every business producing food for the nation’s tables would be impacted.”
Bradshaw explained: “For the future of our family farms, food security and the environment we are calling on the Chancellor to urgently consider the sizable effect changes to APR and BPR could have.
“Farmers have been let down year after year by empty words and policies that negatively impact their businesses, I am imploring the Chancellor, don’t let that happen again on 30th October.”
