The CLA View

Ahead of the 2024 Budget this autumn, the Prime Minister and the Chancellor of the Exchequer have both made it clear that unpopular tax changes are on the way.

During the election campaign, the now DEFRA Secretary Steve Reed made it clear that a Labour Government would not scrap either agricultural or business property relief.

Nevertheless, rumours continue to circulate that inheritance tax reliefs are in the firing line after all. The CLA is lobbying hard on this topic to protect the interests of members and we have written to the Chancellor to raise our concerns.

We are also encouraging members to contact their MP and raise their concerns over such a move.

We have provided a template letter which you can use and adapt to your needs by following this link and writing before the budget is announced on Wednesday, 30 October.

Scrapping inheritance tax reliefs would tear apart family farms and damage the UK’s food security, a new CLA poll of more than 500 farmers and landowners found.

As I return to my role at the CLA following maternity leave it is certainly a subject nearly all members I have spoken to have raised with me.

The key findings from the CLA poll found:

• 86% of respondents said it was ‘likely’ that some or all of their land would have to be sold upon their death, if inheritance tax reliefs are scrapped. Less than 5% said it was ‘unlikely’.
• More than 90% said scrapping reliefs will damage the UK’s food security in the long run. Just 5% said they did not believe the move would hit food security.
• The CLA says the findings demonstrate the danger of removing or curtailing reliefs, at a crucial time for the farming industry.

This government has promised economic growth but at the moment, in the rural sector, we are not feeling the love. Our members are very nervous that careful plans to sustain multi-generational businesses are at significant risk.

The government has said it won’t increase taxes on working people. Farmers are working hard around the clock feeding the nation and looking after the environment, and uncertainty over tax is one of the most pressing challenges facing the rural sector.

Removing or even capping inheritance tax reliefs would have a major impact on the viability of family farms, jeopardising the future of rural businesses up and down the country.

Many farmers could be forced to sell land to pay inheritance taxes, putting livelihoods, and the nation’s food security, at risk, especially if the land is bought by corporates with deep pockets and no inheritance tax concerns.

At a time of profound change in the industry, we need stability for our businesses while we adjust to new agricultural policies.

APR exists to ensure the continuance of farming after the death of the farmer, while BPR fulfils the same objective for other types of family businesses.

Reliefs allow farmers and rural business owners to continue to produce food, maintain landscapes and support the rural economy. Maintaining a stable capital tax system is important to provide business owners confidence to make long-term commitments, particularly those needed when investing for growth or to deliver for the environment over the coming decades.

If there was no relief, or even if it was capped at £500,000 as some have suggested, there would be a high tax bill to pay. Government statistics show 17% of UK farms failed to make a profit and 59% made a profit of less than £50,000 in 2022/23. This leaves little scope to pay inheritance tax out of farm income.

To provide rural businesses with certainty, allow them to forward plan and ensure agricultural land that is vital for food security and environmental objectives is not sold off, the government must ensure a stable tax regime by committing to retain APR and BPR in their current form.