The Labour Government

[Mike N]

Victoria Derbyshire’s car-crash interview with Jeremy Clarkson is worth a watch. Who knew Clarkson isn’t very funny, or intelligent, when he doesn’t have a script writer?

 

[Don Karleone]

If Lloyd Webber, Clarkson and Farage are against it, then whatever the fuck it is, I'm for it.

Add Katie Hopkins to that list as well.

 

[stonerblue]

Is that Jeremy the one that bought a 1000 acres for £4.5 mil so that he didn’t have to pay any tax to the government, which was a big thing for him and his family, then when the actual farmer retired, built a mansion on the property, which is now worth approx £13 mil?

I do wonder why these people are complaining?

Champagne socialist..

 

[Mon Autre]

To be fair, he did say that he didn't think he could be angry on behalf of others, but that he could support them.

He's not complaining for himself - the interview he gave included him saying that he could put everything in a trust as long as he lived for 7 years.

I didn't really understand his point that it was time-consuming to do so, and why should all the other farmers have to do the same thing; that seemed to be him stating there was a workaround available to anyone.

If he wanted to support farmers then maybe he shouldn't have been publicly gobbing off about the fact that buying up farmland is a way of avoiding inheritance tax form the past 4 years. People like him have exploited a loophole designed to protect genuine farmers who are vital to our economy and the fact people like him have advertised it so much has meant that loophole has now had to be closed.

If I was a farmer I'd be angier at the likes of him than I am with Rachel Reeves. I'd also be pretty fuming at him using my plight as leverage when he's clearly only bothered about himself.

That's not to say I agree with the way Reeves has gone about things. I have zero faith that this government intends to seriously address inequality in this country. Surely there was a way of going about this whereby they could only penalise people with the tax hit if they go onto sell the farm?

 

[inbetween]

Indeed. You've got to wonder why so many wealthy people are keen to buy land that is so unproductive in terms of turning a profit. And I suspect the answer is for the same reason that so many wealthy people are happy to buy luxury flats in central London and leave them empty. Because it's offers a store of wealth. Like seemingly every other form of property, farms are yet another where the price bears little relation to the actual value of the land for any sort of productive economic activity (which is why so many of our high streets are in a dire state at the moment, too).

The lack of inheritance is demonstrably an incentive for people who aren't farmers to buy up farm land. Which doesn't mean that such a policy won't harm genuine farmers. I don't really know what the justifications for exemptions from inheritance tax for farms were in the first place. But let's be honest, there aren't many people arguing against inheritance tax on farmland who aren't against inheritance tax in general, so I don't know how much stock I can put in those arguments. I suspect Jeremy Clarkson isn't against inheritance tax because of the effect it will have on farming, he's most likely against inheritance tax on anything at all times.

The one part of IHT that I have always disagreed with is that in terms of property the rules are applied to unrealised value. If somebody inherits a farm worth a lot of money and decides to keep it to work it then how will they pay the tax bill?

The same applies to everything. If I inherit a £1m house and decide to live in it, rent it out or whatever then where do I find £270,000 for the tax?

In reality this forces the heir to sell and realise its value but then somebody has to buy it in return. It's actually very difficult to sell farmland of high enough value for the tax to apply. The only people who could realistically afford it are the rich and the government has just introduced a reason for the rich not to buy it.

This will probably just devalue larger farms and in the end it will reduce the amount of IHT that the government receives. They've already said that it'll only raise upto £500m which is nothing, I think it will be much less.

 

[stonerblue]

The one part of IHT that I have always disagreed with is that in terms of property the rules are applied to unrealised value. If somebody inherits a farm worth a lot of money and decides to keep it to work it then how will they pay the tax bill?

The same applies to everything. If I inherit a £1m house and decide to live in it, rent it out or whatever then where do I find £270,000 for the tax?

In reality this forces the heir to sell and realise its value but then somebody has to buy it in return. It's actually very difficult to sell farmland of high enough value for the tax to apply. The only people who could realistically afford it are the rich and the government has just introduced a reason for the rich not to buy it.

This will probably just devalue larger farms and in the end it will reduce the amount of IHT that the government receives. They've already said that it'll only raise upto £500m which is nothing, I think it will be much less.

If you're homeless you'd flog it.
If you already have a house you flog that

 

[I'm With Stupid]

The same applies to everything. If I inherit a £1m house and decide to live in it, rent it out or whatever then where do I find £270,000 for the tax?

I suspect the answer is that you take out a mortgage on the house to borrow that much money and then get a million quid house for a 270k mortgage. Let's be honest, you'd be in exactly the same situation if there was no inheritance tax and your parents left the house to you and a sibling. How do you split a house? Either one has to buy the other out, or you sell it and split the money.

 

[Churchlawtonblue]

If you can come up with a way of making these global companies pay their tax due in each of the countries they do business in, there will be around 200 countries waiting to implement your rules.

I think Teresa May talked about putting a trading tax on international business and Obama and Trump basically threatened the UK with punitive measures if she went after US companies that avoided paying. corporation tax in the UK.
During the Brexit debate she also threatened to lower UK corporation tax to the same levels as Ireland, ie 12.5%. At the time this was met by dismay by the Varadkah who basically stated that this would destroy Irelands economy which is based on being a tax haven for UK companies. Subsequent to that Rishi Sunack announced in early 2021 that he would raise UK Corporation tax from 19 to 25%, while at the same time agreeing to a 15% tax rate for international companies to be brought in at some time in the future. The US sugested 20% but Sunack and others wanted 15%. By the way this international rate has still to be implemented and given the particular way the UK tax is weighted many companies actually end up paying 26%. Sunack probably had vested interests given his wifes families business, he clearly favoured big business over SMEs as opposed to Osbourne and Hammond before him who gradually reduced it for UK based companies.

 

[blueinsa]

Aye, next you’ll be moaning about all your food being expensive/ imported (think of the environment) etc etc. Farmers aren’t cash rich, but feel free to find evidence they are.

And weren’t you thinking of selling your shares to avoid any changes in tax? Pot kettle and all that.

Farmers where an endangered species back in 2016 for them.

These days they’re seemingly the enemy.

I keep hearing the phrase “rich farmers” which is a bit of a major giveaway for our class warriors I’m afraid.

 

[bluenova]

I re-read your post and you’re correct, apologies, I misread the point you were making. Let me try again but there is probably no single answer.

Farmer produce margins are tight due to limited markets - supermarkets for example will use their dominant market position to pay as little as possible - there is a natural ceiling to what will be paid domestically when you can import produce. But farmers aren’t really going to be concerned with their earnings versus land value - they only care about profit per acre and that has nothing to do with the value of the land.

Land value has certainly increased above inflation over the past 3 decades (not as much as house prices) so there is a case to be made that non farmers are distorting the value but “penalising” actual farmers isn’t really the solution either. The main problem as I see it, isn’t the IHT in principle, but that farms don’t earn huge sums so it limits them being able to mortgage to pay the IHT bill.

I agree about the margins, and while you say they're maybe not interested in the value of the land*, there must be things we can do to make it a more profitable business, especially given how important it is. (*although that does remind me a little of Andrew Lloyd-Webber's comment about them all being the 'salt of the earth', when I suspect this vision of farmers who care very little about the worth of their farm wouldn't apply to huge numbers of them).

One point I've seen a few times, is that selling off a small part of a farm to pay an IHT bill wasn't always considered shocking. Farms being able to grow when needed, or to sell off land to young people who wanted to farm at other times, is I'd imagine more of a benefit to small family farms than the IHT tax breaks ever were.