The UK farming industry has come together to warn the Chancellor of the Exchequer about the crippling effect changes to inheritance tax (IHT) reliefs including Agricultural Property Relief (APR) and Business Property Relief (BPR), might have on family farms, tenant farmers, domestic food security and environmental delivery.
APR and BPR allow working farm businesses to be passed to the next generation of farmers without incurring inheritance tax charges which they would be unable to pay without selling those businesses. APR in particular 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 of their land.
As a signatory of an urgent letter sent to Chancellor Rachel Reeves, the NFU is incredibly concerned about recent speculation that IHT reliefs crucial to farm businesses, is to be reviewed and 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 weeks3 about the detrimental impact of a decision to change APR and BPR could have.
NFU President Tom Bradshaw said, “Let me be clear: changes to APR and BPR would be a devastating blow to British farming as we know it, the effects of which will be felt for generations to come. 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.
“The NFU, alongside other farming organisations, has set out to the Chancellor how IHT reliefs underpin viable working farming businesses, of all shapes and sizes. 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. The average return of working farm businesses is less than 1 per cent. Most would be unable to meet inheritance tax charges if APR or BPR was stripped away.
“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. Without the farm businesses there to manage the land and invest in environmental and biodiversity delivery, legislated targets could be in jeopardy.
“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.”