According to a poll held by the Country Land and Business Association (CLA) scrapping inheritance tax reliefs would tear apart family farms and damage UK food security.
More than 500 farmers and landowners responded to the poll, amid concerns that the government is looking to change agricultural property relief and business property relief in the budget next month.
It 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.
CLA president Victoria Vyvyan said: “This government has promised economic growth but at the moment, in the rural sector, we’re not feeling the love. There is a chill wind blowing through the tax environment and CLA members are very nervous that careful plans to sustain multi-generational businesses are about to be thrown to the wolves.
“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.”
Agriculture property relief exists to ensure the continuance of farming after a family death. It enables farmers and rural businesses to continue producing food, maintain landscapes and support the rural economy.
With no relief or even a cap at £500,000, as some have suggested, this would lead to a high tax bill. Government figures show that 17% of UK farms failed to make a profit in 2022/23, while 59% made a profit of less than £50,000. This leaves little room to accommodate inheritance tax.
The CLA predicts that if this led to a 5% reduction in rural businesses, more than 27,500 businesses would disappear, with 190,000 made unemployed.
Looking at an average farm of 215ac, without the reliefs currently in place, 40% of the land would need to be sold just to cover the inheritance tax liabilities, and diversified farms would be hit harder, needing to sell up to 54% of the ground.
James Grindal, who farms in South Leicestershire, said: “Scrapping APR relief would mean the death of my family farm. Like many small farms, we survive on slim margins and wouldn’t have the funds to cover this hefty tax.
“I’ve spent years building a farm I can pass down through generations. It’s not just a business, but a way of life, a culture and a legacy. To see that wiped out with one single tax bill would be devastating.
“As farmers, we want to feed the nation but cannot do that if we’re forced to sell our land. Labour campaigned as the party of the countryside. This will be the first major test of whether they truly have our backs.”