Inheritance Tax Relief: Farms

Jim Shannon Excerpts

Monday 10th February 2025 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I should explain that if a Member wants to speak in this debate, they have to be sitting in the hemicycle. That is why I am sitting next to the Minister: because it was the only seat available. [Laughter.] I just wanted to declare that at the very beginning. I am very much opposed to the agricultural farm inheritance tax. The Minister is sitting next to me, so I am going to try to nudge him a wee bit—nudge nudge, elbow elbow, wink wink and all the things we would normally do.

I declare an interest as a member of the Ulster Farmers Union; I understand that there are some people from the Ulster Farmers Union in the Public Gallery today. I am a landowner and a farmer in my constituency of Strangford, and I am here to speak on behalf of my constituents on a subject that will have an effect on every single one of them, whether they realise it or not. Every one of my neighbours’ farms has been passed down from generation to generation. I cannot think of one neighbour who has not had a farm handed down, generation to generation.

[Dr Andrew Murrison in the Chair]

I thank the Ulster Farmers Union, which has worked so hard to provide the information that I will share today. It indicates the depth of the folly of the decision to implement inheritance tax on working farms, and the devastating impact that it will undoubtedly have on food security for the entirety of the UK. For my neighbours, for me and for all the people I know in the Ulster Farmers Union and in Northern Ireland, the land is the farmers’ lifeblood. It is more than land: it is their very reason for existence.

The Northern Ireland Rural Valuers Association, in conjunction with the Central Association of Agricultural Valuers, has used available data to look at the impact of the changes to inheritance tax proposed in October’s Budget. They tell me that 6,000 farming taxpayers in Northern Ireland will be affected by the tax change over a generation. My hon. Friend the Member for South Antrim (Robin Swann) referred to the value of the land. The value of the land in Northern Ireland is more than the value of the land here. I say with great respect to all my English, Scottish and Welsh compatriots—to all my friends in this Chamber—our land is better.

What are the solutions? The Minister is sitting beside me, and I hope he is listening—of course he is. There is a way forward. The Ulster Farmers Union said to me that the value of the land was done in the ’70s, ’80s, ’90s and noughties, which gives an unreal rateable value for today. I suggest that the answer is quite simple: take the threshold from £1 million to £5 million, and all the farmers in Northern Ireland—and in Wales, Scotland and England—will benefit. The threshold is too low, so change the threshold. I say to Ministers and the Chancellor that it is quite simple.

I understand that farmers will be meeting the Chancellor shortly; I look forward to the outcome of that. But I will say one thing: let us change the threshold. Let us give the farmers in Northern Ireland some hope for the future. Let us keep those farms that have been handed down from generation to generation. That is what this debate is all about, or it is for me—I hope the Minister is listening.

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[Sarah Dyke]

I agree with the hon. Gentleman.

Levels of confidence among the farming community are at a worryingly low ebb. The National Audit Office reports that only one in three farmers are confident that DEFRA and its agencies can deliver their proposed changes to schemes and regulations. The family farm tax will only increase pressure on farmers, while burdening with extra uncertainty and anxiety farmers who are already suffering with their mental health. Today marks the beginning of Mind Your Head week. Now in its eighth year, it is a campaign that amplifies mental health awareness, run by the Farm Safety Foundation and Yellow Wellies. This year’s themes are love, positivity and resilience—three characteristics we should show to our farmers.

Recently, the Office for Budget Responsibility assigned any revenue from this tax a high uncertainty rating, stating that any

“yield from this measure is not likely to reach a steady state for at least 20 years.”

The Treasury projects that the combined changes to agricultural property relief and business property relief will raise approximately £520 million annually. Using HMRC figures on the total cost of each relief, however, the Liberal Democrats have calculated that the proportion attributed to the APR changes will be only around £115 million, confirming that this misguided tax will penalise British farmers for essentially no benefit.

In its report, the OBR reiterates that the measure will hit older farmers hardest, because they will find it difficult to quickly put in place the transitional arrangements to restructure their affairs in response to the pending changes. I recently spoke to a farmer from Martock who told me that their parents, who are in their late 80s, are horrified by this tax raid. They do not want to lose their home and their business, but the lack of time to implement the changes may make that their sad reality. They implore the Government to consult on transitional arrangements that work with them and for them.

I fear that these family farms will instead be broken up and parcels of land will be sold off at a deflated land value to already wealthy landowners, who will simply add to their large land portfolios.

[Jim Shannon]

I commend the hon. Lady on her excellent speech. I echo what she says about the stress experienced by the elderly generation—the mums and dads. They are probably getting ready for the future and settling themselves into handing the land over to their families, but the situation is causing stress, anxiety and depression. She has been at the forefront in addressing mental health in the countryside. It is not only the young farmers who will feel the pressures of this change; it will also be the mums and the dads, the aunts and the uncles, the grannies and the grandads.

[Sarah Dyke]

I thank the hon. Gentleman for making that point. Indeed, a recent survey shows that 95% of young farmers under 40 see mental health as their biggest concern. It is so significant.

I agree with farmers in Glastonbury and Somerton who feel that the thresholds have been set far too low. Some of them have told me that the figures that the Government have arrived at are just plain insulting. Many farms have a land value that is way in excess of any returns that can be earned on their land. As we have heard, farmers are capital-rich but asset-poor.

A dairy farm near Broughton has been a family farm for five generations and more than 100 years. The farmers there have told me that they already struggle to make a living as it is, without having to face the prospect of thousands of pounds each year being eked away from their business when they pass away. Their son wants to come into the farming business, but the proposed changes will destroy his chances of success. The changes will destroy everything that that family has worked so hard for throughout their lives, trying to secure the business for the next generation.

What is so galling is that the family farm tax fails to address the key issue of land being snapped up by wealthy individuals as a tax haven. Like others, I am desperately concerned about the actual number of farmers who will be impacted by the IHT changes. The Government resolutely refer to a figure of only 500. In my view, however, one farm is one farm too many. My point is: where has this figure of 500 come from? The Government claim that it is from the OBR, but the OBR says that is not the case. If it is not, perhaps the Minister can confirm today where this figure has originated from, and how.

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[Robbie Moore]

The hon. Member makes a very powerful point: this is about the choices that the Labour Government are imposing on many of our family farming businesses. Those families are now having to make difficult decisions about whether to look at disposing of land, plant and machinery or livestock to fit an IHT liability that may come down the line. All of that is reducing their productivity, which will have an impact not only on those family farming businesses, but on UK food production and UK food security. That is why I join all Opposition Members in calling on the Government to change course immediately.

Farmers are not multimillionaires. Many struggle to break even. As my right hon. Friends the Members for Beverley and Holderness and for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) have said, the vast majority of returns for our farming businesses are less than 1%, yet in most cases the value of the land on which they sit will be severely affected by the IHT changes, because the threshold that the Government are bringing out is £1 million. When the average size of a farm in England is 200 acres, and we take into account the farmland, the cottage that might exist on the farm, the plant and machinery, the livestock and the growing crops or stocks that may be in store, the value will be significantly higher than £1 million. That is why the Government need to listen to the NFU and its statistics.

[Jim Shannon]

I commend the shadow Minister. He is speaking exceptionally well and encapsulating the opinion of almost everyone in this Chamber. I thank him for that. In my contribution, I referred to the threshold. Instead of being £1 million on a rateable value in the ’70s, ’80s, ’90s and the whole way through, it should be at today’s value. Does he therefore agree that the threshold should be not £1 million, but at least £5 million?

[Robbie Moore]

I say to the hon. Member that the Conservatives have been absolutely clear: we would axe the family farm tax, and we would reverse the changes to business property relief and agricultural property relief, which have such huge and catastrophic implications. In my view, the Government need to go further—not tinker with thresholds, but provide proper, decent certainty to the whole agricultural community by reversing this provision, which will have catastrophic implications that they admit themselves will give the Treasury revenue of only about £500 million. In my understanding, that would keep the NHS going for about 20 hours. Given the detrimental impact that the changes will have, the Government should think about reversing this disastrous policy.

For the 10th time of asking in this place, what impact assessment has the Treasury made of the effect on growth within our entire agricultural sector as a result of the autumn Budget? What about all the other negative implications—employers’ national insurance, the minimum wage increase, the de-linked payments significantly reducing, and capital grants disappearing—even before we start talking about the family farm tax?

When this tax was first announced at the Budget, I thought that maybe our new Labour Government were being naive. Perhaps they did not understand the catastrophic impact their Budget would have on our farming businesses, and would soon change course. After six months, however, the Government have consistently refused to listen to the NFU, the CLA, the Tenant Farmers Association, the CAAV, Opposition Members and others who have repeatedly tried to expose the damaging impact of the tax.