The Government has been warned to beware of the ‘unintended consequences' of changes to Inheritance Tax, as speculation continues changes will be made in this month's Budget.
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Gordon and Buchan Conservative MP Harriet Cross said Agricultural Property Relief (APR) and Business Property Relief (BPR) were vital in ‘securing the longevity of farming and family businesses'.
Agricultural Property Relief
"The rate of inheritance tax in the UK kicks in at a relatively low value in relation to the value of farming assets, even for a small farm, particularly when compared with that of other countries," she said.
She said in a meeting with the CLA she had heard how farmers were already making ‘rash and rushed decisions' which will impact their businesses, tax position and operations for years to come due to fear of the change. The Tenant Íæż½ã½ã Association had also warned its members have seen an impact, with traditional estates rethinking the way they manage their agricultural land. However, the TFA in its pre-event briefing did highlight APR may need reform.
It suggested it should be available only to those landlords prepared to let for the longest tenancy terms and all those already letting under secure tenancies regulated by the Agricultural Holdings Act 1986.
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Ms Cross dismissed the idea of APR and BPR as tax loopholes for the wealthy adding they were ‘lifelines for hard-working family farms and entrepreneurs'.
Efra Committee chair Alistair Carmichael warned of unintended consequences and the ripple effect if farms were to go out of business.
"What affects farmers will affect vets, agricultural merchants, local shops and post offices in some of the most economically fragile communities to be found anywhere in the country," he said.
Aphra Brandreth, Chester South and Eddisbury MP, highlighted the labour shortages already in the sector, highlighting the reliance on family labour.
Autumn Budget
"If the physical means to farm, the land and the property, are not passed down to the next generation, then we risk losing the people, knowledge and skills that we desperately need to keep the sector viable," she said.
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Patrick Spencer, Central Suffolk and North Ipswich MP, added farmers would be forced to sell off ‘parcels of land' and ‘when farm owners realise that it is hard to sell off small parcels of land, they will be forced to sell their whole holding'.
The Exchequer Secretary to the Treasury James Murray was unable to offer reassurance stating the industry would have to wait for the Budget to hear any changes. However, he highlighted there were ‘many different views' on the reliefs and said he was grateful for the opportunity to hear members' opinions on the topic.
