Here’s a short story about who wins and loses from the status quo of our inheritance tax rules - and about, what you might politely call ‘sub-optimal’ journalism🧵
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I live in a rural area & understand that some farmers just about scrape a living due to pressures from many factors outside their control. However, this chap and the rest of his ilk do nothing to promote their cause. The press should not be giving them airtime. But hey, he who pays the piper.....
The 'final straw' was actually #Brexit.
IHT is just a nice emotive story to paint farmers as victims, but the truth is that most of them burnt the house down by voting for Brexit and they're now looking to pin the blame on something/somebody else.
The issue with the tax, is not this tax. There are many psudo farmers-- escape to the country exploiting the system. Plus other tax loop holes of self employed/vat. It's that every other bit of help to the real farmers has been removed brexit, shit deals (eg AUS) imports of foriegn lamb and beef 1/2
Then we have the Elms, any decent farmer is already
trying to do some environmental work. It's better for the animals to have hedge rows, decent drainage etc. . Have nuance on the size and type of land before blanket tree request. And maybe we could ask golf clubs and the like to pitch in.
The Gov comms was awful. Which has left a void for the landed gentry to fill and create panic. Insentivise real farms and disinsetivise land grabs and tax loop holes. Carrots and sticks.
Re #UK #farmer #inheritancetax perks
Sure #farmers are important they provide food
So too is everyone else not getting the same tax perks;
#supermarket employee selling food
#nurses nursing the under/over fed
#advertising sales people informing us of food
Fact is, we're all worthy of same tax perks
It's almost as though most of the print media have vested interests in the status quo as far as land ownership is concerned. Imo Labour need to use this 5y golden opportunity to reform press ownership (and not get into bed with them as Blair did). It's the only way progressive politics has a future.
Funny how farming has twice as much impact on rivers as water companies, but the print media have led the vanguard against water companies for the last two years…
It's hard to get used to the sawn-off shotgun assault on this govt by a cynically hostile media that looked the other way for 14-years or distracted us by setting us at each other. It's mostly driven by their masters' revulsion of tax. Starmer isn't playing ball.
In my opinion,Starmer mostly IS playing ball with the vested asset owning classes, and it's easy to see why based on the backlash of this policy. He'd be labelled and outright commie if he went for something bolder, but as I previously referred, that's mostly a symptom of billionaire press ownership
Surely the press barons would be less visceral if they were still influencing policy.
Reeves may have laid off reinstating the banker's bonus cap, but the farmers inheritance tax change indicates they aren't playing ball with vested asset-owning classes. We're all
In it together (ish)
The wealthiest land owners can probably circumvent this change with heritage asset loopholes or using offshore structures (see below). A more ambitious Labour would probably work to close these loopholes. Would probably be even less popular with the media though!
Vested interests always protest when a change is made that affects them. If the change makes the overall tax system more equitable then they just have to wear it. It’s like VAT on school fees, some are adversely affected, but it corrects a distortion in the market and makes the tax system fairer.
I also don't think I've seen a single challenge to the "I only earn £12k a year on my £3m+ asset" but somehow can invest £100-300k+ in a combine harvester. Growing magic money trees?
To avoid being classed as a "hobby farm" by HMRC, a farm only has to make a £1 profit every 6 years. It can make a loss for 5 years as long as it makes a profit in the sixth.
I'm not sure quite how it works, but I've been advised that there are significant grants available for farm machinery. I imagine if you know how the system works you could fund quite a lot under the heading of 'productivity'... https://defrafarming.blog.gov.uk/2024/03/12/grants-available-in-2024/
I doubt many of those machines that cost in the £100,000 are ' bought ' most likely they are leased and when people say ' well the machinery alone is worth £xm - the reality is the farm owns 0 equity in plant and change in ownership of the farm would just require changing name on lease agreement.
It's all bullshit, they expense everything and live in gorgeous properties, so 'profit' looks terrible but that's not the reality. My mum a carer earns less a year than them and doesn't have a single asset. I'm sympathetic to keeping family farms but a lot of this is bollocks.
They don’t pay for the equipment, it’s deductible from their tax bill. Almost everything farmers have to pay for is a deductible expense. WE pay for farming. Not necessarily anything wrong with that, but that’s how they can look as though they’re making very little profit.
' The Benefits of Leasing, Hire Purchase and Refinancing
Leasing and hire purchase are both tax and cash efficient way of financing equipment for your business, it keeps the asset ‘off-balance sheet’ ' OFF BALANCE SHEET so not effected by IHT
Why would the possibility of payiing IHT mean farmers not buy equipment ? Its illogical , though it could be due to negative press causing lack of confidene . but logical business people dont let their business run down because they may have to pay tax in some distant future.
Massive farming equipment is usually leased or jointly owned by several neighbouring larger farms. You'd have to be an idiot, or eye-wateringly wealthy, to buy a combine, for example, that can cost north of £250,000, and would basically sit in a barn for 50+ wks in the year.
As the son of a nowhere near wealthy-enough to be worrying about the new tax farmer, I can honestly say that he has (I work in the medical field rather than muddy) invested a staggering amount into machinery.
His multi-purpose tractor costs more than the average house price. Leasing is dead money.
Oh, I reckon there's a fair bit invested in other equipment. Time-share on tractors or milking equipment would be impractical. But I suspect the figures are fluffed up a bit.
I don't necessarily mean to come out to bat for farmers, but these are not mutually exclusive. If they have equipment ok finance leases or purchased outright, they'll be recognising it as an asset an depreciating it over its life. The cost of which will be one of the expenses in getting to that £12k
Think most looking in from outside (opinions aside) can see that people taking home less than the state pension, despite huge assets and spending huge sums on equipment they have no hope of paying off, are either terrible at financial planning or tax planning very carefully
I'm not sure that's right (and again I'm not really on the side of farmers over the IHT changes). It implies very low margins and return on capital, but when farmers have been squeezed by supermarkets, but remains a lifestyle as well as a job, I'm not surprised people stay involved.
Also, when we talk about profit, I'm not really clear if that is after farmers have paid themselves salaries (suspect it probably is, but I don't know the industry and what is typical).
From what I've read many are on a tax efficient salary of £12k, totally normal for an SME with variable costs/profits, but RFU and media are giving the impression that this is their total income. My original point really, not a lot of transparency or challenge to tell the whole story
They don’t pay tax on business expenses (like any self employed) so they can buy £150k tractors, SUVs and the like - and appear poor. They lead very highly subsidised lives. Nothing necessarily wrong with that, we need farmers, but the “only earn £13k a year” thing is BS.
Surely, radical tax reform of property and land is what’s needed? Get rid of council tax, business rates and stamp duty and replace with a land value tax? You are expending too much political capital on IHT, which the wealthy side step
IT, also leads to an unfairness in covering care costs. A millionaire spending £100k on care would see their estate after tax fall by £60k. The estate of a person with a net worth of £500k with identical care would pay the full £100k. Middle class thus more incentivised to opt for assisted dying
Even if he were simply an aging poor’ish farmer he could have passed the farm on to his children over any 7 years to avoid IHT. Or purchased an insurance policy that on his death the payout would cover IHT due. Greedy selfish old man. No sympathy deserved.
An excellent thread. An often-asked question is “why are the ‘real farmers’ supporting the IHT dodging investors?”. The answer is that the IHT exemption has inflated the value of their land wildly. Hence the ridiculous farming yields quoted (£30k annual income on land worth many millions).
Who wouldn’t want the option if passing their farmland on free of IHT, or alternatively selling it out at a multiple of its true economic worth, simply because external capital is using farmland as a tax wrapper to avoid IHT?
That’s why even those farmers NOT affected by the new rules (ie those whose estates are not going to be subject to IHT post these changes) are protesting. They are going to see a significant adjustment in the value of their land, as they it rebases to a level reflecting the income it generates.
Once the paper headlines are released Labour fact checkers should up their game and establish “facts” before any comment. They should up their game given the state of the print newspapers so relied on by msm.
Ok so why not bring in rules on who can own land and how much rather than the blunt approach of IHT which is more like likely to affect real farmers as distinct from the person you mention?
Thank you so much for shining the light of truth on to this area. Reputable journalists would once have given a semblance of balance to their articles, but clearly, many now merely seek to promote their owner's agenda.
100% the last one and Torsten really needs to speak to Lisa and get the BBC changed and proper journalists back in charge of the news and not party appointments
I don't think that it's only The Times pursuing an agenda against the government. I stopped watching BBC news and current affairs some time ago and don't get me started on The Mail/Express etc.
Yeah, Clarkson was *very* unhappy with Victoria Derbyshire.
Govt comms on this (and other things) has generally been dismal. But it's not helped when paper like The Times is publishing disingenuous trash like the pieces cited (esp the Dyson one).
The Times began a downhill/ right ward slide under John Witherow, but it has become a plummet since Tony Gallagher took over. Stopped buying the weekday a while ago. Still buy on a Saturday but mainly for the crossword.
Totally agree, I have a Times student subscription, when this expires in Jan 2025 I certainly won’t renew, under Gallagher ‘s editorship it’s nothing more than a combo of The Sun & Daily Fail, abject failure.
Yes, I’ve heard this, apparently you have to phone them in order to cancel the direct debit and then you’re kept ‘on-hold’ for ages, probably in the hope you’ll terminate the call before you have opportunity to talk to someone?
Those who are complaining loudest have most to lose......as we will see in the states as Trump gives more away to the ultrarich paid for by tarrifs.....
I’m still at a loss to understand why farming is such a special industry that people inheriting a three million quid asset shouldn’t pay a trivially easily (legally) avoidable tax on their inheritance.
The sensible people of the UK have seen through this protest, most probably because of the louder voices screeching about unfairness. The real hard grafting farmers are too busy grafting on their land to join in protests which are really about well off grifters moaning about a tiny % of their wealth
I get the impression that many of these farms run by the wealthy elites are little more than country estates to keep the public at arms length whilst having complete control of the land around their homes.
I'm sure the locals will have plenty of stories about how unneighbourly these people can be.
Have you had a look at the incoming new rules on duty on wine. They are hugely complex. I was hoping that a new Labour administration would be willing to reduce red tape and make going business with Europe easier.
What an excellent bit of investigation. It makes you wonder why Times (and other media) 'journalists' don't do a bit of investigation themselves, but I suspect they're happy to have crap fed to them from someone higher up the food chain.
Gotta think of the mortgage payments.
First they came for the communists; and I did not speak out. Then they came for the millionaire, tax avoiding, ex stockbroker, land owners and I definitely did not speak out
I’ve just read in the Manchester Evening News about some poor farmer’s son who crashed his dad’s £350,000 Aston Martin into a hedge on his farm. His dad was away on business. In Flookburgh, Cumbria, two fields - with planning permission - on sale for £400k per acre.
Any comments/thoughts on the suggestions from @danneidle.bsky.social which could ensure the IHT changes don’t hit any working farmers and also hit those trying to dodge tax even more? Could be a good tweak to help win the argument?
Thanks for this, it is sadly a common theme that we have “farmers” bleating when they really have no idea what farming is. I am a 6th generation farmer and I cannot describe how furious I get when these articles arise. It does us no good.
No, we can conclude that, on this matter, The Times is not a reliable source and should be disregarded. To gain a clear understanding of the inheritance tax (IHT) issue for farmers, we need to turn to journalists with a proven history of objective reporting.
Yes, one that has a track record of giving honest objective advice. Some journalists are tax experts. Some might even be honest and objective. Relying on the Times for reliable information would appear to be a mistake.
Responses beginning "So..." very commonly fail the waffle test, and this is no exception; the simplest response is to discourage the behaviour by pointing this out and muting.
In it they tell the story of John Kemp-Welch. Here’s how he’s described: “Kemp-Welch, 88, who owns 5,000 acres of "difficult hill farming land" in Perthshire where he and his children farm blackface sheep.”
I think you are being very tough on Sir John. You should think of his children, I think I am right in saying one is the Managing Partner of a private equity firm in Mayfair (Piper), which must be very challenging to fit in around his hill farming responsibilities.
Clear impression is of someone who’s given their life to farming. They quote him sympathetically saying “It's not easy. Farming in Scotland is very tough but we are determined to go on."
Now maybe this is a different John Kemp-Welch… but in that case it’s a big coincidence that another 88 year old John Kemp-Welch managed to be chair of the London Stock Exchange from 1994 to 2000
Great thread. Interesting that they just happen to choose a farmer to interview who is a “Sir”. Bit of a clue there that he isn’t simply a run of the mill farmer.
After IHT fb Q: ‘how cld landowners better support their tenant farmers/ help farmers tackle s/mk buying power etc.’ => triggered mass pile-on from some of my landowning friends with ‘envy politics’ featuring in many replies, not much discussion about solutions & Heritage Proj 2025 support - scary 🤯
A true wolf in sheeps clothing! Exactly the sort of person who gives the large % of genuine family farm owners of much smaller farms a bad name. Cats chance in hell his kids are going to suffer.
Comments
IHT is just a nice emotive story to paint farmers as victims, but the truth is that most of them burnt the house down by voting for Brexit and they're now looking to pin the blame on something/somebody else.
trying to do some environmental work. It's better for the animals to have hedge rows, decent drainage etc. . Have nuance on the size and type of land before blanket tree request. And maybe we could ask golf clubs and the like to pitch in.
Sure #farmers are important they provide food
So too is everyone else not getting the same tax perks;
#supermarket employee selling food
#nurses nursing the under/over fed
#advertising sales people informing us of food
Fact is, we're all worthy of same tax perks
LIEbor4fairness
Reeves may have laid off reinstating the banker's bonus cap, but the farmers inheritance tax change indicates they aren't playing ball with vested asset-owning classes. We're all
In it together (ish)
https://www.google.com/amp/s/amp.theguardian.com/money/2024/oct/29/loophole-exempts-landowners-england-inheritance-tax-data-shows
Leasing and hire purchase are both tax and cash efficient way of financing equipment for your business, it keeps the asset ‘off-balance sheet’ ' OFF BALANCE SHEET so not effected by IHT
https://finance4agriculture.co.uk/farm-machinery-finance/
His multi-purpose tractor costs more than the average house price. Leasing is dead money.
The noise is coming from those who long for the return of a feudal system.
To them, this is nothing short of an uprising!
https://yorkshirebylines.co.uk/news/home-affairs/whose-land-tax-avoidance-and-the-broken-economics-of-british-farming/
Govt comms on this (and other things) has generally been dismal. But it's not helped when paper like The Times is publishing disingenuous trash like the pieces cited (esp the Dyson one).
I’m sure the Times will include it in their full reporting the situation with Farmers !!
I'm sure the locals will have plenty of stories about how unneighbourly these people can be.
Have you had a look at the incoming new rules on duty on wine. They are hugely complex. I was hoping that a new Labour administration would be willing to reduce red tape and make going business with Europe easier.
(of which there’s not a lot around)
Gotta think of the mortgage payments.
The same sort of people trying to rile up the people who rely most on the services this tax will support ably assisted by our press.
https://bsky.app/profile/andygjburge.bsky.social/post/3lbrbga3wjc2r
What a relief.
https://www.thebureauinvestigates.com/stories/2024-06-26/hate-speech-and-climate-denial-the-facebook-network-run-by-reform-candidates/