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Although the inheritance tax that heirs would have to pay on the death of a farm owner is half the normal rate of 20%, as opposed to 40%, farmers feel that Labor has betrayed them. Indeed, Labor had repeatedly ruled out introducing an inheritance tax for farmers before the election. Many farmers, who traditionally vote for the Conservative Party, cast their votes for Labor this time, precisely because they believed their promises.
The National Farmers Union (NFU) has estimated that the new inheritance tax rates will affect almost 70,000 farms, while the government insists that the tax will only apply to the richest farms, of which they estimate there are no more than 500.
This begs the question of what is a “rich farm”?
The government is going to impose inheritance tax on farms with assets of more than £1 million. In some cases the ceiling could even be as high as £3m, when taking into account the combined assets of spouses or partners. But given the high value of land, and the recent rise in land prices, inheritance tax could indeed affect a great many farmers. Land is something without which a farmer cannot work, it is in a sense his tool, his instrument of production, so the high value – the value of the land he owns – does not make him rich. The fact is that farms with expensive land often have rather low farm incomes at the same time. I know this from my farming neighbors. I had a woman farmer come to clean my house whose family farm had a herd of dairy cows, but she had to moonlight as a cleaner because the farm income was not enough to pay for feed and veterinary services. So very often the wealth of farmers is a sham. If a farmer sells his expensive land, he will simply not be able to continue his business.
Farmers who took part in the protest said their income was sometimes below the minimum wage, but they continued their hard work for the sake of their children. Now that incentive may be gone.
On the day of the protest in London, I spoke to one of the most “affluent” farmers in our county. John Tucker has a lot of land and about 2,000 head of sheep. There were also cows, but he sold them, not profitable. John is no longer young and doubts his children will continue to farm. This is minus another major producer of local lamb. His son-in-law, who had a fairly large herd of dairy cows, has sold them and turned entirely to renting out farm equipment. Now there are machines where cows used to graze.
For many farmers, like my neighbor Ralph, who has sheep and cows, it is, as he says, “a way of life” – a way of life he can’t imagine any other way. But this way of life is getting harder and more expensive, and after his death his children may not be able to afford it at all and will sell their expensive land to pay inheritance tax and not suffer any more.
According to some estimates, a typical family farm will have to devote 159% of its annual profits each year for ten years to pay the new inheritance tax and may have to sell 20% of its land. There are therefore serious concerns that the result will be that land will simply be bought up by large corporations.
One of the protesters, a fifth-generation farmer, told reporters, “In the last four years, we have been losing money. The only thing that kept me going was that I was doing it for my children. But now that has disappeared overnight.”
The government justifies the introduction of the tax for farmers by saying that many people used a loophole in the tax legislation, buying land and registering it as a farm to avoid inheritance tax. Indeed, there are such “new” farmers, but they still run some sort of farm and produce agricultural products. One of these most famous new farmers, the famous and scandalous former BBC Top Gear presenter Jeremy Clarkson, was the star of the protest. He once admitted in an interview with the Times in 2021 that the main reason he invested in land was to avoid inheritance tax. True, he later clarified that he actually bought the land to hunt pheasants. He is now a farmer. Whatever the original reasons for buying the land, he has a fully functioning farm, which, incidentally, is the site of the popular program Clarkson’s Farm (Amazon Prime).
Many of the farmers who came out to protest held placards saying, “No farmers, no food, no future.”
Judging by the government’s reaction, it is not going to relent and will leave the inheritance tax for farmers in place.
Of course, it won’t cancel out the future, but the future without family farms that awaits us may not appeal to many, myself in particular. Britain, a country that has been producing for centuries, a country that has traditionally relied on family farms, could lose not only its bucolic landscapes of cows and sheep grazing in meadows, but also its food independence. Or we will simply have to eat not fresh farm produce, but cheaper and lower quality industrially produced food grown in agro-industrial complexes.