Agricultural Property Relief

Rachel Gilmour Excerpts

Tuesday 28th January 2025 Westminster Hall

[Rachel Gilmour (Tiverton and Minehead) (LD)]

It is a pleasure to serve under your chairmanship, Mr Stringer. First and foremost, I congratulate the hon. Member for Caerfyrddin (Ann Davies) on securing this vital debate. Right hon. and hon. Members will perhaps be sick of hearing me talk on this topic, but I feel compelled to provide a voice for my farmers. My constituency of Tiverton and Minehead has a similar make-up to the hon. Lady’s. It is overwhelmingly rural agricultural land and home to many farming communities. There are some 1,600 holdings according to the CLA and 432 of those farms will be hit by the Government’s APR changes.

We Liberal Democrats applaud our farmers. As a former director of the National Farmers Union, I feel well placed to highlight the damaging consequences that will inevitably be visited upon them as a result of the changes to agricultural property relief. The Government’s claim that 27% of all farms will be affected is, if I am being generous, misinformed. According to in-depth analysis conducted by the National Farmers Union in collaboration with the OBR and Treasury experts, 75% of the nation’s working farms fall above the £1 million threshold and will be struck by the punitive changes. The changes are said to be caveated by different assumptions on rate relief.

There are misapplied exceptions. The first one is that the average family farm would not top the threshold of £3 million in value, which is just not the case. Great Ash farm in my constituency is a typical good-sized family farm consisting of 256 acres and is on the market for £3.5 million. In an inheritance tax valuation, the farm’s livestock and machinery would be added to the value, bringing the total to around £3.68 million. Even when the acreage is not as large, the value of agricultural land alone often pushes farmers close to, if not over, the £3 million threshold and can certainly shatter the individual threshold of £1 million. If we add to the value of the land the livestock, deadstock, properties, machinery and business, the owners of the farm are looking at a hefty valuation—not one that they can capitalise on to keep the farm, but one that will ensure they are caught in the claws of this onerous death duty.

The second misapplied exception is because farm ownership is not in all cases split equally between a husband and wife, and it does not always pass to a direct descendant. Existing capital gains tax rules have discouraged many older farmers from transferring their farms to their children owing to the potential tax burden, which means that ownership is staggered across many generations in some cases. Often, when there are not ownership models that meet the co-owning married couple status that the Chancellor uses for the modelling of those exceptions, it means that the various personal and dependent inheritance tax exemptions that go into the flawed Treasury equation on this policy cannot be used on many occasions.

The third misapplied exception, the residence nil rate band, is unlikely to be applicable. It is reduced by £1 for every £2 when the estate exceeds £2 million. Therefore, if a farm business exceeds £2.65 million, the residence nil rate tax band is no longer valid. That is yet another misapplied Treasury exemption, which will not have a realistic effect on family farms’ ability to keep the taxman from taking everything they have. In conclusion, I will make no apology for standing up for my rural communities—

[Graham Stringer (in the Chair)]

Order. Your four minutes are up. I call Alistair Carmichael.