What’s the issue?
As a result of the government’s changes to Inheritance Tax (IHT) in the October 2024 Budget, British farmers, the majority of whom earn the equivalent income to the average household, are being treated for IHT purposes as millionaires. This will result in farms being unviable, jobs and skills lost, and an increased risk of even more unscrupulous foreign ownership of UK land.
We believe there is an effective proposal from CenTax that delivers consistent income to the Treasury without the unintended consequences of the original policy. The majority of the UK public believe that farming is a unique way of life, critical to Britain’s future prosperity and must be treated fairly.
The current Treasury policy calculates Inheritance Tax (IHT) bills based on asset values, rather than income. Until now, farmers have been able to apply for Agricultural Property Relief (APR) and Business Property Relief (BPR) – reliefs designed to help family farms and businesses stay intact rather than being sold to pay tax.
Unfortunately, wealthy investors looking for tax loopholes have started to buy up farmland in order to take advantage of these reliefs, even though many have no intention to farm the land. In response, the government has proposed new rules where no or reduced tax relief will be applied to estates worth over £1million.
Sadly, family farmers, 36% of which make under £25k per year in income, have a dilemma where they are asset rich (land prices mean farms are often worth over the £1million threshold) but income poor. This means they will have no option but to break up and sell their farms in order to pay the large inheritance bills that will be coming their way.
Who is behind the campaign?
Fairer Family Farming is a grassroots campaign, organised by a coalition of working family farmers. The campaign was first initiated by David Passmore, Robin Hart OBE, and Phil Merson, long time family farmers with the convening power to tell the story of how current proposals are neither fair nor sustainable and wanted to promote a better alternative.
Who is funding the campaign?
This is a grassroots campaign funded by working family farmers from across the UK who want to see the government adopt a better, fairer system for taxation.
What’s the urgency?
These changes have also effectively introduced a lottery – if the older generation dies in the next seven years the farm will face an existential inheritance tax bill and likely be split up and sold, whereas those farmers who die before April 2026, or don’t die in the next seven years will be able to take steps to protect their livelihoods and make provisions to keep farms viable.
Treasury proposals have created an impossible choice for older farmers. If we retire and hand the farm down, we won’t be able to live there or draw pension income from it under government plans. If we stay on the farm with a roof over our heads, our families will be liable for inheritance tax bills they simply cannot pay without breaking up the farm.
Why should farming be treated differently for the purposes of IHT than other professions?
Farming isn’t just a job – it powers local economies, provides skilled jobs and sustains communities, as well as contributing to the country’s food security – that’s more than most other professions contribute to the country.
At the same time, many farmers struggle to make ends meet – 35% of farmers in the UK make less than £25,000 a year whilst providing an invaluable service to the country. This income is at odds with the value of their land and that means that under new proposals families will need to sell their land to pay IHT bills.
Other farmers who are also struggling with income likely won’t be able to afford to take the farms on and so passive investors, who are buying up land as part of their portfolios, will snap up farms just to leave fields fallow - meaning jobs, economies and food production will be negatively affected – and that impacts all of us.
Why are you campaigning rather than engaging directly with Government?
As part of the campaign, we intend to both raise awareness of the alternative options available to government in terms of ensuring fairness within the tax system, while also engaging directly with government on these proposals.
Why is this campaign separate from other campaigns on this issue? (for example, NFU’s ‘Scrap the Family Farm Tax’)
Fairer Family Farming is a grassroots campaign, organised by a coalition of working family farmers. This campaign is about promoting the alternative options available to government for delivering a fairer tax system without penalising smaller family farms.
Many of our supporters are members of industry groups such as NFU and CLA, but this grassroots campaign is focused solely on the IHT issue.
What is the CenTax proposal?
CenTax, the Centre for Analysis of Taxation, has proposed an alternative solution to Treasury proposals called The Minimum Share Rule.
This rule would effectively allow genuine farmers - those who own and actively farm their land - to keep Agricultural Property Relief (APR) and Business Property Relief (BPR), whilst taxing those passive landowners who hold farmland as part of a portfolio of assets purely for investment purposes. You can read more about the proposal on CenTax’s website: https://centax.org.uk/policy-brief-the-impact-of-changes-to-inheritance-tax-on-farm-estates/
Note: Fairer Family Farming has no affiliation with CenTax, which is an independent research centre.
Is this a partisan campaign? Are any of your members/supporters involved in any political activity?
This is a non-partisan grassroots campaign organised by a coalition of working farmers, calling on the government to consider the alternative proposals for ensuring fairness in the tax system and ensuring that our small, family farms are treated fairly.