Agricultural tax breaks are likely to be a target for Rachel Reeves as she looks for new sources of tax revenue that do not break Labour's election pledges.
First in the queue is agricultural property relief which allows owners of farms to pass on the assets in their totality free of inheritance tax during their lifetimes or in their wills.
The rationale was that it allowed succession on working farms which would otherwise be prevented by a substantial tax burden. In practice it has encouraged wealthy individuals from outside agriculture to buy up farmland as there is no upper limit on APR (think Dyson).
The tax relief has pushed up the price of farmland and has thus made it more difficult for new entrants to come into the sector, compounded by the reduction in local authority tenancies which offered a first step on the ladder.
However, even if APR were abolished or capped, most farmland would still qualify for business relief on inheritance tax.
What could be abolished is rollover relief on capital gains tax. If a farmer sells land for development, it can be 'rolled over' into the purchase of farmland without attracting capital gains tax.
Given that Reeves is thought likely to increase fuel duty, albeit probably only marginally, 'red' diesel tax relief for farmers becomes even more valuable. However, given rising input prices, uncertain harvests and volatile output prices affecting cash flow, this is likely to be left alone.
No comments:
Post a Comment