I am sometimes guilty of being an idiot, I may sometimes shout my opinion and this may have ripples that I don't foresee. I'm certainly guilty of that last week where I tweeted my life would have been easier if I had inherited a farm and just had to pay the inheritance tax. Understandably this upset some people in the agricultural industry, so looking more into the subject, and reforming my views, I have issued an apology.
I would like there to be more routes into farming, I don't think it should become a closed shop that you have to be born to, but I also think the new tax limits being set currently are too low and will affect too many small farms, and chances are they will be bought up by the really big farms or by corporations, so any change of landownership wouldn't be in the direction I had initially thought.
There does needs to be some change of law to make it less appealing to people buying it for tax avoidance purposes that keep the prices of land so high.
Anyway, off to hide for a bit!
Truly a subject near and dear to my heart as I will someday inherit a farm and inheritance tax (at its current level) is going to play a huge part in the future and whether that land will be able to be passed onto my children. Here anyway, inheritance tax limits are set to expire in less than three months and the limits will be cut in half making the future implications even more profound. Not sure what is the right or wrong way of looking at it, but I know my children's futures are dependent how it all works out.
ReplyDeleteI am sure that some even halfway competent lawyers could have drafted rules around the agricultural reliefs that would have curtailed the "hobby/avoidance" elements without the disastrous consequences for even small family farms. The farm that I grew up on, at two blocks of around 100 acres each, would have been caught, and the people farming it certainly could not have afforded the likely IHT bill on death. They had enough problems with being sufficiently profitable to afford the outlays needed to keep buildings and equipment functional and up-to-date, an IHT bill would have necessitated sale of one of the blocks, and that would have made the remainder uneconomic.
ReplyDeleteAs I have observed elsewhere, the current crop of politicians on both sides of the HoC have absolutely zero knowledge or appreciation of the reality of life for people like farmers, hence so much of the mindless red tape and bureaucratic nonsense that they have landed onto the agricultural sector, they behave as if food grows on a Waitrose shop shelf!
I don't understand any of all of this financial stuff, but my husband seems to think that setting your farmland up as a trust fund for your successors would work, what do you think Kev, would this work?
ReplyDeleteI don't understand any of this financial stuff, but my husband said why not set up a trust fund for your family? Would this work Kev?
ReplyDeleteNot sure if Trust funds are the same in the U.K. as they are in the U.S. but here in the U.S., the limits are the limits, trust fund or not. Half of my parent's farm is in an irrevocable trust now and just managed to skirt under the limits. But those limits will be reduced by 50% at the end of this year and when my father passes, his half won't be so lucky. The only way to pay those taxes will be to sell parts of the farm, the very thing we are trying to prevent.
DeleteWithout a trust, it goes through probate, which means the courts take a healthy percentage first AND THEN the limits are applied the same as they are for trusts.
Kev, Farming is a critical concern (or should be, for most people - after all, everyone I know has to eat). We as a human race should be doing everything possible to encourage it, not discourage it. And sadly, no matter how hard we try, we cannot always post things that please everyone.
ReplyDeleteTo Ed's point, I am in a similar situation in that we need to close out my parents' estate (by the end of the year, apparently). It is land that is used for agriculture now and should always be so. I just wish people could see that all land does not fall into only three categories: Housing and commercial property, corporate farms (somewhere else, not here of course), and wilderness that is miles away and for which people have to commute to. It is surely more nuanced than that.