Stuart

Private client law and tax, Fellow of Agricultural Law Association. All views personal and subject to change based on evidence.

[Stuart @StuartMaggs]

#FamilyFarmTax talking points - a helpful guide:

1. "It's only 500 farms". No, that's APR claims above £1m made in one year, 2021/22. Many more people than that are affected by the rules. The CLA estimated the total number is 70,000 farms. On the Government's own numbers it's about 16,000 (500 x one generation of 32 years). The true figure is that it's likely tens of thousands are affected.

2. "There's a £3m exemption". No, that only applies if both spouses are alive, they can split the farm between them, they amend their wills before dying, both they are their children are in stable marriages (or they are prepared to use complex trust structures). It will not be possible for all couples to achieve this.

3. "Family farms are protected". No, DEFRA says the average family farm is 217 acres. At £11,300/acre that's £2.45m. Together with equipment and a farmhouse, that's likely well over £3m which is the maximum level of the exemption. Farms well below that level are affected and will need to take steps to restructure the way they are organised or face inheritance tax bills when the older generation dies.

4. "How can your income be that low? The price of land must be high because of tax avoiders." The current 100% exemption for land and businesses have applied since 1992. The price of land didn't start to rise significantly until 2005, when the Single Farm Payment was introduced. Tax rules only have a minor affect on land value, which is driven by multiple factors including development, rollover relief, environmental needs, and that they're not making more of it

5. "This only affects the very wealthy and tax avoiders" At one end lifestyle buyers may well be within the £1m exemption per person, at the other the very wealthy can still plan by making gifts. The people who cannot avoid it are family farmers who need to retain access to the farm income.

6. "Wealthy farmers can just pay their fair share of tax" An average farm income is about 1%. Even if you pay over 10 years, the inheritance tax payments will often take all the income, and so part of the farm will need to be sold. This reduces efficiency and makes the farm less viable for the future.

What have I missed?

[Stuart @StuartMaggs]

@SandyofSuffolk I’m sure you get on famously with them. Have a lovely day.

[Stuart @StuartMaggs]

@SandyofSuffolk You seem nice. Have you tried talking to the people at Sizewell C?

[Stuart @StuartMaggs]

@hubmaker This is my fear. "It's a global issue, we can't control the weather. Our thoughts and prayers are with those affected."

[Stuart @StuartMaggs]

Radio 4 this morning explained (again) that we face issues with global food supply that will see prices rise over the coming year, ticking up inflation significantly.

Has anyone any insight into the actions that the Government is taking, through DEFRA or HMT, to address these issues. Or that they recognise them?

[Stuart @StuartMaggs]

We've seen the spike in fertiliser prices for a while now, and there are reports about an extreme El Niño event brewing off South America that is going to hit food production over the next 18 months.

It's late in the day, but I think we're in time for an agile DEFRA to take steps now to adapt for these risks. Is @EmmaforWycombe on top of this? What are we doing differently now to reduce the risk to the UK this presents?

[Stuart @StuartMaggs]

Our National Debt is rapidly pushing towards £3tn. Who else should we be in hock to for all that money?

[Zack Polanski @ZackPolanski]

We must stop being in hock only to the bond markets.

No one voted for the bond markets.

[Stuart @StuartMaggs]

@Nickesanderson It’s not my estimate! I reckon it would take at least that much to get through planning knowing our systems.

[Stuart @StuartMaggs]

HS2 is now going to cost around £100bn.

For £300bn, we might be able to build two dams across the North Sea, from Scotland to Norway, and from England to France, protecting a large slice of Europe from future sea level rises.

Makes you think!

https://t.co/GtGGdgkJZt

[Stuart @StuartMaggs]

@GlendajSharsted One of the things business always asks for is stability, rather than tinkering. Leaving business alone to get on with it often produces the best results.

[Stuart @StuartMaggs]

Given the discussion about land value tax, could someone familiar with the proposals help with how it will work for farmers?

If current profits are between 0.5% and 1% of the land value, how would the tax be implemented without decimating the industry?

[Jenny Rawson @JennyA_Rawson]

2 weeks today!!
We’re looking forward to celebrating diversity in Suffolk farming with nature at its heart ! We kick off with a free breakfast , followed by talks and a farm walk . Pls book as places are limited ! Pls share with your farmer / adviser contacts , ta ! 😁

[Stuart @StuartMaggs]

@rcolvile The change in percentage of people across the globe in absolute poverty over the last 100 years

[Stuart @StuartMaggs]

@peterowens71 @LeeHurstComic People get really emotional about giving (and receiving) a legacy, feeling the Government is metaphorically standing to one side waiting for them a person die so they can have their healthy slice out of their life's work.

It's a very human reaction to a financial transaction.

[Stuart @StuartMaggs]

Inheritance tax amounts to less than 1% of UK taxation and is widely hated.

A 2023 report from the IFS predicted that within 6 years, one in eight couples will suffer inheritance tax on their deaths. In the south-east that will be one in four.

Andy Burnham's proposal to replace IHT with an annual care levy is interesting, but I struggle to see how compliance could be done without exorbitant costs and intrusion across the population.

A Land Value Tax is all well and good, but it presents an incentive to invest elsewhere, and our most land-intensive industry, farming, already struggles to make profit without having another tax heaped on it.

So how could this actually work? Good ideas welcomed.

[Stuart @StuartMaggs]

@RogerMerry1 @jrkdenison I’d predict a massive rise in contract farming arrangements!

[Stuart @StuartMaggs]

I’m not sure that’s cause and effect the right way round, but to be honest I don’t know. I am concerned that there’s a root issue about the sort of stable business environment that allows people to think and plan for the long term, which pivots back to the point that sometimes the best thing the Government can do is stop tinkering and let business get on with doing its thing.

[Stuart @StuartMaggs]

“There are only two years in the last hundred we’ve had a higher proportion of Brits working.” This is true, but feels wrong.

The reason is twofold - reduction in average working hours, and a huge expansion of women in the workforce.

If you look at the hours worked per male, and males in employment the figures have dropped dramatically, which accord more with what we see.

So yes more people are working, but there are a lower proportion of men in work compare to, say, the mid 80’s, and they are on average doing fewer hours.

This explains how unemployment can be up, but employment (including both sexes) can be up too.

If we want better growth, wealth and productivity, we need more full time jobs and more economic output per person. Working smarter and harder. It’s a big ask, and I don’t see Torsten embracing the complexity of the issue when he’s hiding it behind the more attractive statistics he can bring into play.

[Times Radio @TimesRadio]

The government's priority is to "embrace AI", says pensions minister Torsten Bell.

But the government will protect the UK from the "some of the consequences of it".

@TorstenBell | @RosieWright99

[Stuart @StuartMaggs]

@AlanJi73069669 I was only looking post ‘70’s.

[Stuart @StuartMaggs]

@ruairidh_kerr I think the issue is that if you’re doing something because you feel ideologically that it’s the right thing to do, having a tax rise actually raise money is just an added extra.

[Stuart @StuartMaggs]

There's not enough detail here to judge whether this would work, but if realistic opposition parties promise to reverse it, then it won't.

Discretionary sales that face higher tax bills would be put on hold in the expectation rates will come down after the next election. CGT take collapses, market transactions grind to a halt, economic activity holds its breath to see what will happen.

Look to Alistair Darling's 50% income tax rate for the evidence. Politicians cannot ignore behavioural response.

[Wes Streeting @wesstreeting]

Your tax isn’t fair. So here’s what I would do about it. A wealth tax that works👇

[Stuart @StuartMaggs]

@rgarryneal The loan charge covered up a failure to enforce by introducing retroactive taxation. It was an unconscionable move.

[Stuart @StuartMaggs]

@GrahamCompton It’s the Starmer way. “I take full responsibility and have therefore sacked somebody else.”

[Stuart @StuartMaggs]

@NHTractordriver @DanNeidle You could certainly do something based on a multiple of agricultural rents.