Agricultural Property Relief

Llinos Medi Excerpts

Tuesday 28th January 2025 Westminster Hall

[Ann Davies]

I totally agree. Nobody understands those fields better than the farmer who has worked that land. They know where those wet corners are and they know where they should not tread during certain times. The sustainable farming scheme—the SFS—is coming out in Wales next year, and it is about nature restoration, so I absolutely agree.

Estate agents in west Wales are already seeing increased investor interest in purchasing farms following the autumn Budget. Selling land to pay an inheritance tax bill will inevitably hit tenant farmers because the £1 million threshold will hit asset-rich estates. Around 30% of land in Wales is farmed under some sort of tenancy agreement and, although some is local authority-owned, much is owned by private landlords. The Tenant Farmers Association anticipates that more insecure agricultural tenancies will be terminated to allow land to be sold to avoid taxes on death. Other landlords are reducing the lengths of term offered to tenants, who were expecting longer leases, so that farms are more readily sellable in case of tax change.

[Llinos Medi (Ynys Môn) (PC)]

Tenant farmers on Ynys Môn are expected to be impacted by the change to APR because landowners there will have no option but to sell their farms to cover the additional cost. The landowners have a good relationship with their tenants but they have no choice but to sell, leaving generational farmers to lose their homes, businesses and future, with long-lasting effects on the rural community. Does my hon. Friend agree that the realities of agriculture in Wales, including for tenant farmers, must be fully considered by the UK Government in a Wales-specific impact assessment?

[Ann Davies]

Diolch yn fawr. I absolutely agree with my hon. Friend. I should add that the wider economy will lose another vital source of food production. If that land is taken, it will never go back into food production.

My hon. Friend mentioned the effect on Wales, and there is a knock-on effect on the Welsh language: 43% of those involved in agriculture in Wales speak Welsh. Keeping our farming communities alive is key to moving towards the Welsh Labour Government’s target of achieving 1 million Welsh speakers in 2050. There is real worry—farming constituents have told me, with an eye on what it means for their own children, that they are concerned about the impact of the changes on future food production by Welsh-speaking families in areas of Wales already facing depopulation.

The families behind farming businesses are important to this debate. They are not just figures; they are people—people such as Richard Twose of Maenhir, who runs a 700-acre farm of 400 Holstein dairy cows and 300 pedigree Lleyn ewes with his parents, brother and children. APR and BPR changes have blown apart the family’s succession plans. They may now be forced to transfer the parents’ share in the farm and hope that they live for another seven years, or else the family will face a big tax burden on top of their business debt. Just yesterday I heard that, to add to the family’s worries and concerns, Richard’s father had passed away suddenly over Christmas.

The APR and BPR changes do not appear proportionate, in many ways. Inflation has already eroded the nil rate tax band of £325,000, which has been frozen since 2009 and is set to remain frozen until 2030. When APR and BPR were introduced, the nil rate band covered 56 acres of farmland; today, it covers 29 acres.

How the changes apply is not fair because the particularities—who someone shares the farm with, which tools or machinery they own or have hired, how much business debt they have—have a direct impact on their inheritance tax bill. Although the Government have said that married couples and their descendants can benefit from up to £3 million in tax relief, in reality tax experts are quoting figures that vary between £2 million and £4 million, based on different scenarios. We must remember that the Chancellor stated in October that the starting point for calculations is £1 million.