OBR casts doubt on how much will be raised from hitting farmers with inheritance tax bills
Government's plan will hit growth and investment, says CLA - and it must consult now
The Office of Budget Responsibility (OBR) has cast doubt on how much revenue will be raised from hitting farmers with inheritance tax bills, in the latest blow to the Government's policy.
The OBR, which provides independent and authoritative analysis of the UK's public finances, has now assigned the plan to cap vital inheritance tax reliefs with a 'high' uncertainty rating.
The CLA is now calling for the Government to hold a consultation on the measure, arguing it will hit investment and growth, damaging the wider economy.
President Victoria Vyvyan said:
“It is clear that neither the Treasury nor the OBR has fully considered the impact on the economy of these tax reforms.
“Ministers have repeatedly said that the OBR had certified their claims, but the truth is that the OBR themselves say there is a high degree of uncertainty as to how much money will be raised, if any at all.
“But we do know that farmers and small business owners are pulling investment, cancelling machinery orders and considering whether their businesses are viable for the long-term.
“This means fewer jobs, less food security, less growth and less money going into the Exchequer to pay for public services. Government must put these reforms out to a meaningful consultation, so that Treasury can truly understand the damage they are doing.”
What else did the OBR say?
The new OBR report also states: "Individuals tend to structure their affairs with a view to inheritance planning in their 50s and 60s, which will primarily affect the costing over the longer-term.
"In the medium-term, it is likely to be more difficult for some older individuals to quickly restructure their affairs in response to the measure."
Its 'central estimate' is that the policy will raise £500m by 2029/30.
The CLA has repeatedly argued that as well as the financial impact on farms and businesses, the policy is also causing emotional distress and a mental toll on those who work in what can be a stressful and isolated industry.
We will continue to lobby the Treasury to hold a full consultation.