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The Treasury has refused to entertain a compromise put ahead by farming teams to melt the affect of UK inheritance tax reforms on the agricultural sector, regardless of rising stress to rethink the coverage.
Farming leaders proposed a clawback mechanism, which they mentioned would generate related revenues whereas defending household farms from the levy, throughout a long-awaited assembly between the Treasury and the trade.
The teams — the Nationwide Farmers’ Union, the Tenant Farmers Affiliation and the Nation Land and Enterprise Affiliation — have criticised the choice by chancellor Rachel Reeves to finish a long time of exemption from demise duties for farmers in her October Price range.
However Treasury minister James Murray and farming minister Daniel Zeichner informed the teams the federal government wouldn’t row again on its proposed reforms, which the trade warns might threaten the UK’s meals safety.
“The response from our members goes to be certainly one of fury, certainly one of actual anger, certainly one of desperation that we’ve seen over current months,” mentioned NFU president Tom Bradshaw.
“We went to [the] Treasury with an answer. We recognise the fiscal gap that the nation faces,” he added. “However in the mean time, the door is shut from [the] Treasury.”
The clawback — first recommended by tax lawyer Dan Neidle of Tax Coverage Associates final 12 months — would see agricultural property solely appeal to the levy in the event that they have been offered inside an agreed time interval after inheritance.
This might higher goal rich people exploiting the tax reduction, the teams argued.
“Now we have introduced a compelling different, however the authorities is deaf to the chance,” mentioned CLA president Victoria Vyvyan, including that she believed the federal government’s resolution to dig its heels in confirmed that the coverage was “ideological”.
“I’ve actually not needed to assume that that is ideology-driven, however the cash isn’t sufficiently big to justify the assault on our trade,” she mentioned.
The federal government mentioned: “We frequently meet representatives of the farming trade to hearken to their views, however strongly consider it is a honest and balanced strategy which helps repair the general public providers all of us depend on.
“Our reforms to Agricultural and Enterprise Property Aid will imply three-quarters of estates will proceed to pay no inheritance tax in any respect, whereas the remaining quarter can pay half the inheritance tax that most individuals pay, and funds might be unfold over 10 years, interest-free.”
The reforms imply that from April 2026, agricultural landowners will likely be topic to a 20 per cent levy on land above a threshold of between £1.3mn and £3mn, relying on whether or not they’re married and in the event that they personal a house.
The choice has led to a major political backlash, and energised the farming neighborhood.
Final week, Prime Minister Sir Keir Starmer was pressured to chop brief a go to to a housing improvement in Milton Keynes after a bunch of farmers in tractors disrupted the looks. Throughout a tractor protest in London final week, Starmer insisted that “farming is high of the agenda”.
Opposition events have slammed the reforms, and overwhelmingly sided with farming teams on the difficulty.
Following the assembly, shadow surroundings secretary Victoria Atkins mentioned Labour “clearly didn’t care about rural communities”.
She added: “Opposite to the phrases that come out of Keir Starmer’s mouth, that is but extra affirmation that farmers are on the backside of the listing of Labour’s priorities.”
Liberal Democrat surroundings and rural affairs spokesperson Tim Farron mentioned the federal government was “throwing farmers to the wolves”.
He warned that the “household farm tax might be the ultimate nail within the coffin for a lot of communities struggling to manage”.
A number of the authorities’s personal backbenchers have additionally known as for the reforms to be softened.
Throughout a petition debate on the modifications on Monday final week, Labour MPs proposed tweaks corresponding to elevating the farm worth threshold, introducing an “energetic farmer take a look at” to ascertain if the land was getting used for agriculture, or making a clawback system.
