Rachel Reeves is right to back public services over tax loopholes for the wealthiest landowners
19 November 2024, 12:46
There’s a lot of anger in the farming community right now about recent changes to inheritance tax on landowners.
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I have deep sympathy for UK farmers who are facing challenges on multiple fronts: changing subsidies, Brexit, inflation, climate and environmental breakdown. Clearly we need proper measures in place to support farmers with these issues.
However, the tax changes introduced by Rachel Reeves will only affect a relatively small number of the wealthiest landowners. As part of a broader package of tax rises to invest in broken public services, the Chancellor has changed the way that agricultural property is taxed.
From next year, farmers will be able to pass on £1 million tax-free, and after that, their families will pay 20% on agricultural property - half the usual inheritance tax rate. In practice, as Rachel Reeves pointed out, a married couple using other exemptions can pass on up to £3 million of property tax-free. The statistics show that only 200-400 families a year will pay the new charge.
Before these changes were made, it was very attractive for wealthy investors to buy up farmland to slash their tax bills. This pushed up prices of land, hurting ordinary farmers. Jeremy Clarkson boasted that avoiding inheritance tax was “the critical thing” in his decision to buy his farm. This can't be good for rural communities.
Some of the loudest voices opposing the changes include aristocrats with landed estates, for example, the 19th Earl of Derby, whose family has owned Knowsley Hall since 1385.
Not all farmers are critical of the new tax changes. Guy Singh-Watson, a farmer who founded Riverford Organic, has argued that while he thinks the changes could have been better designed, he was broadly supportive of closing loopholes used by “cynical investor landowners”.
The bigger picture is that public services are in a mess, and the public wants to see them fixed. Long NHS waiting lists, crumbling schools, faltering bus services and potholes are all examples of why the country desperately needs more investment. This applies as much to rural communities as to the rest of the country. Asking wealthier landowners to contribute a bit more is the right decision given the state of the country.
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Robert Palmer is the Executive Director of Tax Justice UK
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