The leader of North Yorkshire Council has urged the Chancellor to rethink planned inheritance tax changes on farms, saying the industry should be supported, not given fresh challenges.
In a letter sent this week to Rachel Reeves, Councillor Carl Les OBE said he was writing at the request of Conservative members who had been lobbied by farmers and other rural residents on the issue.
The letter, which is co-signed by the leaders of the other four political groups on the council, including Labour group leader Steve Shaw-Wright, states: “(Members) are very concerned about and opposed to the fiscal measures you proposed in your recent budget, particularly about inheritance tax, and we ask that you reconsider these and change your measures.
“We ask that you engage further with farmers’ leaders, especially the NFU, who are much more cognisant of the issues, and the evidence that supports their concerns.”
Cllr Les said he was particularly concerned about elderly land-owning farmers who had based their tax planning affairs on the presumption of a nil rate applying, and would now not have the length of life left to pass on assets within the seven-year transition period.
The councillor added that small farms could easily be worth a value at which the ability to pay 20 per cent tax on the asset, even with a ten-year period to pay, was not matched by the profitability of the business.
He said: “In these circumstances, a £1m trigger point is too low.
“To sell off part of the asset to pay the tax would further reduce the sustainability of the operation, and would risk losing the enterprise or passing it to investors whose interest is more in tax avoidance, not food production per se.”
The councillor said if the inheritance tax was to be charged, there should be a distinction made between owner-occupiers of a working farm, and those investors who were using the farm as a legal tax avoidance scheme.
Family farms were the most productive and maximised food production, but they were facing land price pressures because of investors who still had the advantage of a 20 per cent inheritance tax rate bonus compared to other forms of investment, he added.
The councillor concluded the letter by saying: “Farmers, and the work they do in providing food security, and stewardship of our natural assets, are an essential part of the rural economy, and we urge you to reconsider.
“Their existence is challenging financially, and they deserve support, not further challenge.”
The government says it has committed £5bn to the farming budget over two years, including more money than ever for sustainable food production.
Ministers claim the changes will only impact around 500 estates a year, with these estates paying half the rate of inheritance tax paid by others and having ten years to pay the liability back interest-free.
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