CLA reveals dangers of removing inheritance tax relief

Changes to agricultural property relief for inheritance tax in the government Budget on 30 October could “tear apart” family farms and impact food security, according to a survey by the Country Land and Business Association (CLA).

The CLA received responses from more than 500 farmers and landowners outlining what impact potential changes would have on their businesses and the wider agricultural sector.

The vast majority (86%) of those surveyed said it would be likely that at least some or all of their land would have to be sold off following their death if the existing relief was scrapped.

See also: Inheritance tax fears prompt sales of farmland

More than 90% of respondents felt that UK food security would be damaged in the long run as a result.

The future of inheritance tax relief will be determined as part of the Budget, with speculation amongst industry that it could be removed or potentially capped at £500,000.

Economic modelling by the CLA found that, without agricultural property relief for inheritance tax, an averaged sized farm of 87ha would need to sell 40% of its land in order to cover tax liabilities.

CLA president Victoria Vyvyan said: “This government has promised economic growth, but at the moment, in the rural sector, we’re not feeling the love.

“Removing or even capping inheritance tax reliefs would have a major impact on the viability of family farms, jeopardising the future of rural businesses up and down the country.”

Ms Vyvyan concluded: “Many farmers could be forced to sell land to pay inheritance taxes, putting livelihoods, and the nation’s food security, at risk, especially if the land is bought by corporates with deep pockets and no inheritance tax concerns.”

Leicestershire farmer James Grindal added that scrapping agricultural relief would mean the end of his family farm.

Mr Grindal said: “Like many small farms, we survive on slim margins and wouldn’t have the funds to cover this hefty tax.

“I’ve spent years building a farm I can pass down through generations. It’s not just a business, but a way of life, a culture and a legacy. To see that wiped out with one single tax bill would be devastating.”