Millions of pounds of investment ‘scrapped’ as farmers fear impact of tax reform

Press Release

Rural business organisation Scottish Land & Estates (SLE) says millions of pounds of investment has already been scrapped and more will follow, as the UK government ignores the concerns of family farms and businesses.

The policy paper published on 21 July (Agricultural property relief and business property relief reforms) shows little understanding of the real-world impact of the tax reforms due to come into force on 6 April.

Eleanor Kay, Senior Policy Adviser (Agriculture and Climate Change) for SLE said: “We know that investment in farming infrastructure is being cut,  all kinds of plans are being put on hold and even sales of machinery are significantly down, since this policy was announced. This is mirrored in other rural businesses eligible for BPR.

“There was no consultation prior to the original policy announcement and now the government seems to have completely dismissed the concerns raised by rural stakeholders  since the announcement. It is astonishing that there has been no proper impact assessment of how the legislation, particularly changes to Business Property Relief, will affect not just the farming sector, but a range of other rural businesses.”

Other concerns raised by SLE include:

• Lack of impact assessment means the government has no data to back up its assumptions on the consequences of the reforms;
• No transitional arrangements to ease the blow for older farmers who have not yet transferred farms down a generation;
• Total disregard for all the sector reports showing that many farms are operating on very tight margins with decreasing average revenue (including the government’s own figures);
• Lack of awareness of the implications for food security. Domestic food security should be a priority for the government, both to ensure high-quality meat and produce continues to be available, to reduce reliance on lower quality imports and to reduce food miles;
• The government claims the policy is ‘not expected to have a significant impact on family formation, family stability or family breakdown’. A wide range of industry bodies have sounded the alarm over the potential for greater stress and anxiety caused by these changes, with a resulting negative impact on farmers’ mental health;
• No differentiation made in the policy paper between the market value of a farm and the value for IHT purposes, as raised previously by the CAAV.

Eleanor Kay continued: “These tax changes will have a profound impact on the rural sector for decades to come.

“For years we have called for mandatory rural impact assessments to ensure policy decisions are made with proper consideration for their impact on rural communities. This is a prime example of how badly things can go wrong without such an assessment. 

“There is still time for the government to make sensible adjustments to this policy so that it avoids considerable damage to working farms. We urge them to listen to rural businesses and prevent the loss of millions of pounds of investment.”