When farmland has become financialised in the way it has been because of inheritance tax exemptions, farming can’t work, so farmers need to realise that actually having an inheritance tax charge helps them to reclaim farming for farmers and for the benefit of the people of this country.
One Twatto for missing that extant farmers are quite happy with a high price for farmland. It would be farmers who aren’t.
A second, and conclusive, Twatto for failing to realise that if this – if – true about tax then it’s also true about subsidy. So, abolish the subsidies and make farming better for farmers. Or, at least, worse for current farmers and better for would be farmers.
What a strange coincidence that Will “moron” Hutton has a piece in the Groan that says much the same. Is this what Leftoid Central is preaching today? I imagine D2 will produce a piece on the same lines shortly
To summarise Will Hutton:
The biggest problem with “solving” structural issues like this is that there is a *lot* of collateral damage for the people who – for a generation now – have come to depend on the way the system works.
Yes, the subsidy system and taxation encourages some poor behaviour that damages ‘real’ farmers and reduces our food security – but if you’re going to change it, you need to do it in a way that doesn’t wipe out the few remaining family farms that are barely surviving. In our current economy no one (apart from Clarkson) is moving *into* farming.
The threefold arguments against this particular move are
1) Labour explicitly ruled out a tax grab going into the election (ho hum..)
2) There’s very little evidence it will generate any meaningful income
3) In the short term it will probably lead to further absorption of small farms into exactly the tax vehicles the government is trying to dismantle.
In principle reform is desperately needed. In practise this is bollocks.
Seeing as TPTB have decided small farmers are to be eradicated, everything they are doing makes perfect sense.
Never forget, when TTK was asked “Westminster or Davos?” he replied “Davos”……..
WTF does “farmland has been financialized” mean? And, if “farming can’t work” under current conditions, how is it that a lot of farming is going on? The leftist tendency to string together a few words claiming a problem exists without coherence is stronger than ever.
, you need to do it in a way that doesn’t wipe out the few remaining family farms that are barely surviving.
It’s amusing that the left don’t the contradiction between this & their obsessions about “food miles” & natural produce & organic & the rest of the greenery.
If you really want a return the C18th you are going to need people who know how to do small scale farming. That knowledge is a tool kit that took centuries to acquire. You throw it away, you haven’t got it any more. It would take centuries to replace it. It won’t be something you can learn from books. It’s learnt by experience of doing it. And experience handed down through the generations.
When Spud goes on holiday abroad, by how much does the nations IQ increase?
The other alternative is they want an excuse to cull millions of us and using the Stalinist approach to farming is as likely to achieve that as anything else.
According to a piece I was reading earlier on the BBC, the average return on farm capital is 0.5%
Sucking money out based on capital value will have a devastating impact on the viability of businesses that have such a terrible rate of return.
Well, no, not really.
If you calculate something like ROCE, including the notional land value and all the kit, then the price achievable for pretty much any crop will give you a low number for the return, so low as to be completely silly.
If you apply a massive discount to the land value, then the return will at least begin to look semi-reasonable.
In which case, finance should be more easily available, no?
A thought I had was that this could be a wheeze. Force farmers into a position where they would have to sell land or find a more productive use of the land. The labour government wants to build onshore wind turbines and would need land for those turbines. A farmer would receive about £10,000 a year per turbine that they agree to host.
Since the farmer would have ten years to pay off the IHT, then if you host about 10 turbines, then you would get £100K a year. OK, you would need to pay income tax on that and then hand the rest over to cover the IHT bill.
That’s the conclusion I came to. Force the usage away from agri to resi or commercial.
But, it’d still hit the planning system, so I suspect there’s a Phase 2 to the cunning plan.
@salamander: But if you have a solar farm or wind turbine on your land, the capital value has just gone up massively. So an even bigger IHT bill to pay next time around…….
My feeling is that the ulterior motive if there is one is to drive agricultural production down and make more land cheaply available for re-wilding etc, thus having a double whammy effect on the move to Net Zero. Less UK emissions from food production, more carbon sequestered instead. Ultimately all the land would be in the hands of the corporations (who don’t pay IHT of course) or not for profit/charity type owners (who also don’t pay IHT). Drive the small farmers (and in that respect I mean anyone under 1000 acres, and probably eventually 10k acres) out of business.
@ Ducky McDuckface
That is indeed how it works. It’s only because the land is passed down so effectively free that farming can make any viable return on on paper . That’s what makes the inheritance tax so awkward. It’s assigning a transfer value to the land that stops it being “free”.
Land values for farm land with planning permission for housing have fallen in recent years but are still huge compared with basic agricultural land prices. I don’t see there being many farmers who wouldn’t entertain selling of the odd acre or two as that’s the only way of getting real money from a farm. Perhaps that should be taxed as a capital gain as compensation for inheritance tax exemption.
The government is planning to reform the planning system. I suspect there will be provision for easy change of use of farmland that will also prevent reviews and lawsuits to blocking such change of use.
This could well be the ultimate plan: Industrialisation of the countryside for either energy production or re-wilding in order to create a carbon sink. Either use would be fine for the London Luvie cocaine and canapé set.
Salamander: 100%. Also kneecaps the Tory Shires and sorts out the Racist Countryside problem. Not that the Diversity actually cares: when it leaves its urban ghettoes it complains that it gets its trainers muddy and McDonald’s isn’t just around the corner. I have that one first hand.
Don’t forget that most of the Diversity comes from places that don’t think the countryside is a thing of ineffable beauty, as well-fed urban European Romantics do. Back in their shitholes the countryside is full of sweated labour, disease, predators, and in places, landmines. Why the fuck is whitey interested in the countryside?
Rachel Thieves is not really qualified to run the economy, being peripheral to actual decisions in her previous incarnation. So it’s unsurprising she’s made this major error with the farmers.
Sir Queer and his band of lunatics will not be causing damage for long if they continue making huge mistakes like this one – good riddance to these control-freakery leftist destroyers!
Problem is, with their majority they’re in for the next four and a half years unless the entire polity collapses.
I don’t get the idea that the chancellor has to be an economist. It’s a political position and there’s any number of economists in the treasury and as party advisors they can call on.
The chancellor’s job is to get the party’s broad policies implemented and make the trade-off decisions.
To that end I don’t buy the idea she didn’t know what she was doing. She has a picture of a communist on her wall and has made no secret of her socialist sympathies. This is also the party that hates the countryside and brought us the spiteful countryside act, we shouldn’t be surprised.
She knew exactly what she was doing.
+1 Andyf
No IHT for anyone but tax the CGT uplift in value above normal when planning permission is granted.
Even better, devolve CGT and the TCPA to local authorities and they’d soon be promoting this new money making scheme and granting the permissions.
-1 for “above normal”, but +many lots for devolving down to tier 2 councils.
Just a thought. What is the likely effect on farm land prices of this legislation? I would imagine it’s a great disincentive to buy it, no? What would happen if the price fell to the normal return on capital? That’s going to be the probate value when a farmer dies, isn’t it? Probate values are based on current prices. Going to make a big hole in Thieves’s IHT expectations.
“What is the likely effect on farm land prices of this legislation? ”
None to positive. The changes to APR are mirrored with the changes to BPR so there’s no change in relative terms between the inheritance taxation of business assets and farm assets. Before it was 0% all round, now its 20% all round, with a £1m zero allowance. While all other assets are taxed at 40% over £325k. So if it made sense to invest your hard earned into farmland before the Budget it still does now, as the least worst option. Possibly even more if you can sink it all into a £2-3m farm, and structure it so you get all the right allowances.