Inheritance Tax, National Insurance and VAT

Duke of Somerset Excerpts

Monday 27th January 2025 Lords Chamber

[The Duke of Somerset (CB)]

I declare my interest as a farmer and an employer in the West Country. All three of these changes will have a large detrimental effect on the economies of all the UK regions and thus hinder growth.

The Library briefing paper, while exposing some regional differences, indicates that wherever a farm is located the average capital value exceeds £1 million—to which, of course, must be added assets such as tools, livestock, non-agricultural buildings and tractors. A single tractor can be worth several hundred thousand pounds.

These Budget changes come at a time when family farms are fearful for their future, lacking confidence in government policies, with accelerated chopping of the BPS payments, pauses in SFI capital grants and now increased national insurance contributions for their employees. This fear is manifested in investment cutbacks. Farm machinery sales are 15% down on the year—so much for growth. Many of these family businesses, farms or not, have been passed down from generation to generation, each one making improvements and investments to grow the business; all are now to be taxed on these improvements.

It is not farmers’ faults that long-held land has hugely increased in value. Values are determined by factors outwith their control. Landowning farmers are thus asset rich but cash poor, meaning that many who inherit a farm will find it impossible to fund the 10 years of tax from their meagre capital returns, typically of around 0.5%; that is a government figure. There is less money for investment and less growth. It says a lot for the Government’s attitude that they are proposing an amendment to the Finance Bill to alleviate some of the pain for non-doms while ignoring similar representations from our hardworking, indigenous family businesses.