The fallout from the budget in the agricultural world continues.
Those with literary interests may be familiar with the comic novel Cold Comfort Farm by Stella Gibbons which features a character named Aunt Ada Doom and has been described as typical of a certain genre of romantic 19th-century and early 20th-century literature with each of the eponymous farm’s inhabitants having some long-festering emotional problem caused by ignorance, hatred, or fear.
In a week when thousands of farmers protested in Whitehall and a former Tony Blair aide said that Labour should ‘do to farmers what Thatcher did to the miners’ and that farming is “an industry we could do without”, some may be feeling that they are currently on the receiving end from characters with similar emotional problems as the inhabitants of Cold Comfort Farm.
The government, in an updated press release yesterday issued jointly by HM Treasury and Defra, has attempted to shed some light on what it terms the APR and BPR reforms and, presumably, in the process, hopes to make everyone feel a bit better. It includes the disputed statistics about haw many claims will be affected. The key passage from the press release is as follows:
The latest figures show that the top 7% (the largest 117 claims) account for 40% of the total value of agricultural property relief. This costs the taxpayer £219 million. The top 2% of claims (37 claims) account for 22% of agricultural property relief, costing £119 million.
It is not fair for a very small number of claimants each year to claim such a significant amount of relief, when this money could better be used to fund our public services.
What seems glaringly obvious to those of us who prepare tax valuations and advise on taxation matters is that by far the majority of “claims” for APR are made by non-farmers where, for example, there is a house in the country with a few paddocks that qualify for relief from inheritance tax. As the statistical analysis shows, if those lower value claims are excluded, around half of all farms would be impacted by the reforms.
Those with longer memories will recall that, back in the 1970s and 1980s when all estates were still heavily taxed at rates of up to 75%, there used to be something called “working farmer relief”. If the aim of the government is to prevent the otherwise already wealthy from using APR as an IHT shelter for tax avoidance purposes, perhaps it is time to dust off the old tax manuals and see if a new form of working farmer relief may provide some assistance to those in Whitehall and in the Shires.
