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**Hugh** · 05-11-2024, 21:10

How many farms will be affected by Budget tax rises?

https://www.bbc.com/news/articles/c8rlk0d2vk2o

Quote:

Paul Johnson, the director of the Institute for Fiscal Studies (IFS), an independent economy think-tank, told Sky News: "The changes will affect a remarkably small number of some of the most valuable farms."

He added: "[Farms are] still more generously treated, actually, than farms used to be in decades past."

The Treasury estimates that 500 estates including agricultural land will be affected by the agricultural property relief reform, external per year.

Dan Neidle, an independent tax expert, says the number of actual farms, external affected is likely to be below 500 per year.

There were a total of 462 inherited farms valued above £1m in 2021-22, according to HM Revenue and Customs (HMRC), external:

345 valued between £1m and £2.5m
80 at £2.5m to £5m
37 above £5m

Under the new rules, those 462 farms would be affected by the 20% inheritance tax on any value above £1m (not on the whole value).

However, as Mr Neidle points out, like for the rest of the population, there is no inheritance tax to be paid on the value of property up to £325,000, bringing the untaxed total to £1.325m.

If a farmer is married, his or her spouse would be able to pass on another £1.325m tax free, taking the total untaxed amount to £2.65m.

There were 117 farms valued above £2.5m in 2021-22, according to the HMRC figures, external.

In addition, there is an £175,000 tax-free allowance on a main residence when it's being passed on to children or grandchildren. This brings the total untaxed amount for a farming couple to up to £3m.

One of the reasons this was brought in was that very wealthy people (James Dyson amongst them, who has bought up 37,000 acres of farmland in the last 15 years) bought farmland as a way of avoiding Inheritance Tax on those assets, whilst also driving up the price of farmland.

https://www.fwi.co.uk/business/prime...lionaire-dyson

Quote:

Billionaire inventor Sir James Dyson has embarked on an agricultural spending spree, snapping up thousands of acres of Lincolnshire farmland.

The vacuum cleaner tycoon is believed to have paid some £150m for more than 6,800ha (17,000 acres), purchased through his new company Beeswax Farming (Rainbow) Ltd. The land includes much of the Nocton estate, near Lincoln.

… Buying farmland is popular with many wealthy investors because it doesn’t incur inheritance tax. Some critics feel this unfairly bumps up land values, pricing “genuine” farmers out of the market. But others feel it can create opportunities, too.

Average English farmland values reached a record high of £22,500/ha (£9,100/acre) during the last three months of 2012, according to land agent Smiths Gore. Bare land values rose 6% in the final quarter of 2012, although equipped land values remained unchanged.

Lincolnshire grower Andrew Ward, a former Farmers Weekly Arable Farmer of the Year, said: “If you have to borrow all that money at £8,000-10,000 an acre, it is an absolute non-starter because you cannot fund that sort of lending purely out of farming.”