Why treaty bill is still relevant
OPINION: Last month marked the beginning of the political year, beginning with Waitangi Day.
An estimated 45,000 converged on Whitehall, a short distance from Parliament and a stone’s throw from number 11 Downing Street, the home of the Chancellor of the Exchequer, who announced several measures in October’s budget that would have far-reaching implications on agriculture and the wider sphere of other family-owned businesses.
The headline news was the chancellor’s decision to reduce inheritance tax reliefs from April 2026, striking a huge blow to farmers’ confidence. Currently, farmers on their death can pass down their businesses to a spouse or children without any type of taxation, by claiming 100% Agricultural Property Relief (APR) and Business Property Relief (BPR).
From April 2026, APR and BPR will be capped at £1m, with values above this only benefitting from 50% relief, effectively delivering a 20% tax on any assets over £1m to the successor, which can be paid off over 10 years.
The Treasury has claimed around 500 farms a year will be affected, meaning 73% of farms would not have to pay the tax, based on HMRC figures from 2021-22 which showed there were 462 inherited farms valued above £1m that year.
The Country Land and Business Association (CLA), alongside a myriad of rural advisors has said the changes could impact 70,000 UK farms over time.
This estimate is made based on land being valued at an average cost of £10,000/ acre, meaning 100 acres will hit the £1m threshold, with the value of growing crops, seeds, fertilisers and plant and machinery quickly pushing these values towards £2m.
Read More
Speakers at the protest pointed out that while farmers were asset rich, they were largely cash poor, with current average profits of around £40,000 per year, with the likely solution of needing to sell land to meet the inheritance tax debt – a move that itself would result in a separate Capital Gains Tax.
Raising a huge round of applause, celebrity Jeremy Clarkson sent a message to government, saying, “For the sake of every farmer or landowner paralysed by a fog of despair that has been foisted on them, I beg the government to be big and accept that this measure was rushed through. It wasn’t thought out properly and is a huge mistake, so please admit this and back down.”
