This is the partial closure of a tax-avoidance loophole. The tax on the hypothetical £3.5m farm would be £100k, that is £10k/year for 10 years. It's payable (and extremely lenient compared to what non-farmers face).Sandydragon wrote: ↑Sun Nov 24, 2024 5:37 pmI understand WHY the government are looking to target rich investors, but this approach risks making that more of an attractive option as actual farmers have to sell up. For investors land will be on sale which they can then rent out to actual farmers and sit back to collect their rents.Puja wrote: ↑Wed Nov 20, 2024 10:48 pmBut the tax is marginal - so a farm of £3.5m is only paying tax on that £0.5m and would have 10 years, interest free, to spread out that tax bill (and that's assuming that they're not bequeathing the land to their children early and avoiding the tax altogether). I don't think the tax is particularly well-designed (apart from anything else, the relief should be "per farm" rather than "per person" as it's assuming a strikingly heteronormative nuclear family of husband+wife - woe betide anyone divorced or just plain single), but the principles behind it are solid and could be a benefit to the farming industry rather than a problem by removing the incentive for rich people to park funds in tax-exempt land.Sandydragon wrote: ↑Wed Nov 20, 2024 9:06 pm
Tenant farmers not so much, but it doesn't take much acreage before that £3m threshold would be reached.
Many farms dont have huge profit margins, so while there is value in the land, and in equipment, the running costs are hefty and profit margins slim. Clarkson is a loud mouth, but his series on farming did highlight how tight margins are.
Now you could argue thats just tough luck and if the business isnt viable then unlucky. But having a healthy argicultural sector is pretty handy when trying to reduce carbon emissions caused by importing food. Alternatively, the land will be bought by rich landlords who just employ tenant farmers (or put it to other use). This could easily be one of those laws with unintended consequences.
https://www.thelondoneconomic.com/news/ ... es-385977/PujaData collected by property consultants Strutt & Parker show farmers are increasingly being squeezed out of the agricultural land market by wealthy investors.
While non-farmers were responsible for less than a third of farmland purchases in 2010, by last year this had risen to 56 per cent. In the last year alone, 400,000 hectares (988,422 acres) of agricultural land has been taken out of use for farming.
The analysis is linking this to financial advice that recommends the potential tax breaks of investing in farmland.
You mention that the tax could be only on 0.5m. Over 10 years. When your profit is about 30k per year, how do you find even that. The government can’t even be certain on how many farmers will be affected by this. The fact is that farming is not an industry that makes anyone rich. Profit margins are minimal and since brexit the various subsidies have been or are about to be cut right back.
This feels like a poorly thought through policy, and I get why farmers see it as the final straw.
But stop for a moment. Are you really saying that someone about to inherit an estate worth £3.5m is in need of tax breaks? That's ridiculous.