As an American who does not understand the history and innerworkings of your tax code, my heart goes out. I hope a correction comes quick before people are forced off the farm.
The problem is they count small holding as farms then suggest most farmers are effected. Really many of small holdings are actually the land owned by rich people that made money outside of farming.
I'm not a farmer but realise what a huge - and harmful- impact the new tax regime with have on UK farmers. Asset-rich, cash poor is truly an apt description of all my farming friends. Labour don't understand what a catastrophic impact this will have on "small" - and large - farms alike.
Fellow Labour supporter here. I work in the countryside in conservation, come across a lot of anti-farmer rhetoric amongst the left. So glad I found your channel, really informative in answering the questions I have about the farming business. Can’t wait to watch more. I will read the book - and also, Reform’s agricultural policy. Have never given garage a second glance before, so this just goes to show that Labour is pushing their own supporters away
Buyers regret now? When will people learn that anything from the left doesn’t work and has a great detriment to the people? You only have to read a history book (even one of these modern day ones) to learn that socialism just kills people and people to progress. Any farmer who voted Labour I do hope it affects them more, just like the old who did the same. As for “it will not affect 85% of farmers” is another lie that labour has told. There is no farm with less than 100 acres that makes a profit. It was only about 10 years ago that a farm of a 1000 acres could turn a profit, now it’s more like 2000 acres. So at current prices 2000 acres at £10k an acre is worth £20m. That’s without machinery, buildings and the farm house itself. This is nothing more than a land grab by the government. Oh that reminds me of Starling on the Ukrainian farmers.
@@NKY151voting out has nothing to do with it. This is state out the communist playbook. Just look at the EU and what’s happening to their farmers. Same thing but a different attack pattern.
I farm just over a 1000 acres in Cumbria but yet my farm is worth less than your 120 acres. When I tell people we have 1000 acres they assume I’m loaded however nearly 50% is peat bogs, moss and heather. I haven’t been on some parts of it for 35 years as no sheep ever goes on it. So the size of farm isn’t an argument. Location is also a major factor.
Tbf, I do believe he's talking about relative land to himself. And seems to accept the issue of regional land value as well as comparative land production. He's just trying to be concise here. I'd be prone to have said something similar. Where I live a 1000 acres would mean you're well off. 1000 acres in North Wales, Cumbria and much of Scotland? Fairly screwed too.
The limit has been set by ignorant urbanites who think that they get it. They show 1) no understanding of locked/up capital 2) the income generation of 'ordinary' farmers or 3) any of the implications or loopholes of what theyve done. I despair
THANK YOU. I live in a small rural town just outside London and was surprised that the allowance was only £1M. My dad's ex-council house is worth £500K, and there are plenty of houses worth £1-2M. I hope that there may be small print to allow exemptions for inheritance to children who are going to farm the land themselves. fingers crossed
Inheritance tax on agricultural properties is simply a way for the government to force more farm land onto the market for the benefit of speculators and investors
Probably what Bill Gates told them on his visits to No.10 over the last few weeks. He was accompanied by Larry Fink, CEO of Blackrock. You Will Own Nothing & Be Happy don't forget.
Why would anyone invest in land if the inheritance tax is so terrible? Unless it was still the best form of tax avoidance? In which case, why are some farmers complaining?
@@IntermediateSolutions the money is made in developing the land. Housing solar farms and environmental rewinding projects. Not in the production of food.
The other part of this issue that most non rural people won't connect is the long term change to food quality. British farming produces some of the safest food in the western world. People need to understand that this new threat to British agriculture will come round to affect them. Imported food with ever increasing additives - sugar, hormones and agri chemicals some of which are banned in the EU are causing a cancer epidemic which is directly destroying the NHS. It's not completely bad management that is hurting the NHS , it's the diet of our population. Hurting British farming in this way will only ultimately hurt the people of Britain. That's why the average Brit should care about this.
@user-pd6pb2uq8r sorry didn't perhaps make my point very well. The NHS is the best thing about Britain and is my strongest wish for all of us thar it continues. Just saying that the farming community in Britain in general still cares about the animals and crops it produces. Destroy our farming system and introduce more industrialised farming scale and food quality will suffer as is the case in the US. Poor diet brings obesity cancer and all sorts of health implications that overload the NHS. Our farming system matters to everyone. Just trying to make people understand why a tax change to what they might see as wealthy business people will ultimately affect them. This is a big picture that needs joining up.
@@edwardbichan9729 tbe nhs is crap, its a burden on Workers and healthy people, its time health care was private in the uk Its the same with social housing, only the dregs of society get them and drag the areas down
You explained that very well. It's devastating to realise the implications of what policy is doing to our farmers. If and when farmers need to sell land, can they break it up into small plates that are affordable for small holders who want just a couple of acres to set up market gardens? Maybe doing this would stop corporates buying it all up and allow many small scale regenerative food producers to buy land. Cheers J
The £1m tax free is in addition to the personal tax allowances which can add up to an extra £1m when adding in spouse allowance and passing to a child of the deceased. So actually in your case you probably will have very little tax to pay, maybe 20% on machinery at most.....and judging by the john deere that shouldn't add up to a huge amount.......!😉 (that's not a dig, I've got an old Zetor!)
Very good summary. We’ve been left in a very serious situation. 5th generation on our farm, ROI is very low but we could end up with a 1 million tax bill. That would be the end of us
11:05 the revenues of the Crown Estates are paid directly to the Treasury, so are taxed at 100%. If you roll the Sovereign Grant into the consideration of the Crown Estate, the tax rate is about 75% still. If the Crown Estate were broken up and put into private hands, the revenues to the treasury via income/corp tax (and IHT every generation) would be massively diminished... Basically, the Crown Estate is effectively nationalised already...
Your presentation is spot on and amazingly coherent. Thank you for doing this and please circulate it as widely as possible. This government has no understanding of the countryside or of running a business and doesn't seem to be listening when people like you so clearly set out why the proposed changes would be devastating, as well as counterproductive. This policy was not even discussed with the NFU in advance to assess what impact it would have. In fact, they specifically said they would not do this and blatantly lied. The returns on farming are terrible already and it is massively stressful but we do it because it is our home as well as our livelihood. Family farms will disappear as their farms are divided into either uneconomic hobby "farms" of a few acres or bought up by huge companies. Farmers would strike if they could but we can't - our animals need looking after, as do our fields, footpaths, hedgerows, woods, streams etc. It is frankly insulting that farmers don't appear to count as "working people". As you show, it is obvious that these payments on death would be completely unaffordable due to the low profitability or loss-making nature of most farms. The government cannot pretend not to understand this which makes you question their motivation for doing it. The tax it will raise will be dwarfed by the damage it will do for decades. These changes would affect not only farmers but all but the smallest family-owned businesses. They say they want to bring growth but that is laughable. Who is going to set up a business if this is how you are treated? Who is going to work on a farm from dawn to dusk just to try (unsuccessfully) to pay HMRC? I just don't understand what they are thinking and cannot work out how we can make our farm work. What they have achieved is to create a suicide window whereby some elderly or unwell farmers desperate to pass their farm down will take their own lives in order to protect their families and farms. They were told if they worked until they died, they could pass their farms on so many have continued working well beyond when most sensible people would have retired. So much for a government that values people's mental health, maybe farmers don't even count as "people", let alone "working people". If this government had a shred of respect or consideration for farmers, they would not have behaved like this. I honestly expected better and less cruelty from Labour. I wish you and your family the very best on your farm - you seem just what farming needs. However, sadly, you are also exactly who this policy may well affect, which shows what a travesty this is.
Once you lose an industry its difficult to get back. I grew up in a farm so know the hardships. But my kids have no idea and we live in a rural area. My brother lives in a town and his kids don't know what a farm is. Food is the life blood of us all. We all need to eat and people are so much healthier eating proper food not factory produced crap.
I was interested to see if Labour was going to challenge IHT for farmers. Let me put a couple of debating points. My wife and I have worked all our lives to have a very nice house with some land in Kent. When we die, there will be IHT to pay. If I had kept my business, then there would have been IHT to pay on the value of my shares. Why should farmers be different? There does seem to be this thread with the farmers I know where they are proud that their are third or fourth or whatever generation on their farm - all untouched by IHT. Family-owned companies that I know have to plan ahead for IHT and/or pay the IHT bill; they may be fourth generation but they have had to pay taxes like the rest of us. I know of many farms, whole or partial, who have been purchased by “London bankers” solely because their investment is protected by IHT. Look at Dyson as an example. Should these people be able to avoid paying IHT when every “normal” person has to? I wouldn’t be a farmer for the world. At the mercy of weather and, mostly, big buyers like mills and supermarkets. I think most farmers work very hard for small gains. However, when I hear a farmer talk about having to sell up because they can’t break even; a farmer talk about their small farm not being able to compete; then I think of every other industry - from leatherworker to rope makers to coal mines - that have had to adapt to new realities. It’s not nice but I don’t think you can fight economic realities for ever. No farm, or farmer, has a right to keep on farming; just as no manufacturer has a right to keep on producing. Every business has to pay its way. If a mountain sheep farmer can’t break even or better, should the consumer pay extra just to keep that farmer doing what they want to do? Food is very cheap these days compared to when I was growing up 60 odd years ago. By that, I mean as a percentage of average income. Again, when I was growing up, there were large buyers of produce (who supplied the local grocer, greengrocer, butcher etc.) but the power of the supermarkets is such now that they determine the survival or not of many farms. However, detail a better system - price controls? (That’s never worked in any country). I don’t think that this Budget, in respect of IHT on agricultural land, has got it right. At all. I think it is typical of politicians of any and every persuasion that their prejudices rule the head.
@ thank you, I appreciate that. I was trying to put over several different strands of a complex situation - some of which conflict with another. On one side of us is a large orchard of eating apples. I know the farmer well as issued to play rugby with him. Their main acreage is arable but they diversified into fruit perhaps 10 years ago. He bought the orchard knowing it had to be grubbed out of the old Bramley. So, £250,000 later, the orchard had the new style of trees, grown along wires. But, he had to wait 4 years until the trees produced an economical crop. In that time, he was paying a lot of bank interest. Even when the first crop was picked in the late Autumn maybe 5 years ago, it had to go into cold store. Then months later, the supermarket decided it wanted some and so it went to packers and then onto the supermarket warehouses. Finally, in can go an invoice - and then Tesco take 120 days to pay. That’s the Tesco that takes only cash in and yet takes 4 months of free credit from its suppliers. On another side of us are arable fields left wild for the last 2 years by another farmer. Why? Because he can’t make it pay. He can sow cereals but the recent harvests have produced grain only graded as animal feed - and that means a loss for the farmer; so, it’s been left wild. Very nice for the birds, the deer etc. but not making any return for the farmer.
There is a base of ~£2.6m for a couple. Raising 100 beef cattle should keep one person employed for 35 hours per week. That's probably the £7k net income, if all goes well! But there are subsidies too, until recently they were worth another £10k. Also vat rebate could increase this. Perhaps an ok wage for being your own boss if you enjoy the work. Although that provides revenue for local businesses in outgoings from the gross income. That's without pension & sick pay & investing in the farm. Although there is the capital value which can be passed on tax free up to £2.6m for a couple... YMMV. Renting the land should raise £10-£20k... The value of the land is unlikely to decrease as it's still a good tax investment!
This is a very interesting video that explains the position from an Agricultural perspective very well. However, you have ignored that fact that the problem is not limited to farmers. Business property is to be taxed in the same way and business owners will suffer in exactly the same way. If they run a business from property they own, it will be a mill stone around the neck of anyone that inherits it. This will kill off many businesses in the same way it will kill off many farms. This Labour budget was a sad day for the UK economy!
The craziest thing that I take from this is how detached from its agricultural value land is. Wasn't Ricardo's land value tax aimed at rectifying this? I don't know a huge amount about it but something I would like to explore more myself. But no party even seems to see this as a problem.
Wealthy people bought/buy farms to avoid inheritance tax. At 50% rebate over £1.3 -£2.6m, they will still probably buy it. & There were/are subsidies just for owning farm land.
I’ve mulled over all the different ‘strike’ ideas, and I think the best response to Rachel Reeves and ‘Labour’ would be for every farming business in the country to sit down with their accountant long before April 5th / year end, and work with them to actively reduce their tax bill to as little as possible, as in cut it down, hard. If we want to ‘strike’ in protest, then strike against those in HM Government and the Treasury who seek to harm US, don’t strike against consumers. So make use of investment allowances, max out pension contributions, IHT and CGT mitigation, add partners to spread profit and bring youth into each business earlier than planned, farmers over 60 to gift assets now instead of waiting; claim for *every* tax deductible item, claim every penny of VAT on every input and ‘farmhouse repairs’ etc etc. Be proactive, and tell your accountant that you want to reward Reeves spite with your own. Keep it legal, but make sure YOU see the benefits of actively planning to reduce tax, instead of Reeves thinking she can just pull our tits to milk us dry without any pushback.
Its a misunderstanding of value and price. The price of land is set by, as you correctly point out by people and companies using agricultural land for non agricultural purpose. The value of land for a farmer is in producing food, the price of which is set by commodity markets which in turn require low prices to allow the rest of industry to operate on top of them. Money is a means to facilitate trade between different goods. This as with most "good / happy deals" relies a symmetric relationship, where asymmetry exists there exists the extortion. When land comes to market there is intense asymmetry formed by the difference in value between the land as agricultural and land as an asset.
This is sloppy legislation, as I'm sure you're aware, the reason for the 'cracking down' is that the largest agricultural landowner in the UK is James Dyson (yes, the vacuum guy), it had become a way to avoid inheritance tax, with many farmers being forced into tenancy and diversification, further bolstering the value that the wealthy can hide from HMRC with little benefit to farmers. As you pointed a out, the previous system was abused by the wealthy, now it can still be abused by the wealthy, but denuded of the originally intended benefits for farmers. The solution for many years has been setting up a trust (you should look at setting one up for your farm if you have not already), but there needs to be legislation to allow for a farming estate trust that allows specifically working family agricultural concerns, allowing equipment, livestock and other requisites. It is child's play to write legislation that stipulates tax exemption based on use over a period of time. The continuing problem with all tax systems is that they are most easily navigated by the people who should be paying the most and least navigable by those who cannot afford to.
@pauleaton6908 but it needn't be this way, good laws are possible. The UK and EU have some of the best farming practices in the world, some of the legislation is silly and people often focus on that, but we have excellent animal welfare standards and hygiene standards so high that they had to start adding dirt to Swiss cheese to get their holes back (interesting story, look it up). The EU is often bashed for its failings, but rarely lauded for their successes. The reason all phones now charge from USB is because the EU insisted that all phones be capable of it to reduce charger clutter and e-waste. Apple obeyed the letter of this law, but not the spirit. There are good laws out there and good laws can be made, we are not living in a dystopian hellscape, no matter what the Mail may have you believe. The alternative to bad laws is good laws, not lawlessness. The pain with which Olli decried having to agree with Farage was not full throated support for the man, but dismay that there are sensible policies to be had, but only coming from someone with whom he shares little common cause outside of. The wealthy abused a good law meant to protect farmers, Labour's solution was to remove the protection rather than refocus its attention. Rather than vote reform, we need to get sane parties to refocus their attention.
I've head this thought for years now, somehow there needs to be a designation of "Dedicated Farmland" that by law has to be used for agriculture of some form for majority of a the years over a period, renewing at the end of each period, and it would have to be worked atleast in part by the owner. I feel like this would ensure that the land value is in line with what you can produce from it and that would also ensure that younger people who wants to become farmers has a reasonable chance to. And if you do this you can make the inheritance of the land completely tax free on the condition that they also work it. Haven't thought it through completely but I know that something has to change.
We have something very similar to this in Japan, and it's worked pretty well over the decades in preserving Japanese domestic rice production. The one exception to this is that with the ageing population and fewer younger generations taking up farming, it makes it more difficult to repurpose the land and leads to abandoned fields. Still, the land reform policy that the US occupation put in place in Japan should be a textbook example. It broke up the aristocratic holdings and gave it directly to the tenant farmers with restrictions on the reselling and repurposing of agricultural land. It pretty much created the Japanese middle class overnight. Now we just need a way to incentivize younger people to work these fields.
I'm sorry for all our farmers after this horrendous budget. But you should also know that the modern labour party are not the same as those who built the welfare system and other reforms after the wars.
@@NKY151it was just a little over 50% of farmers who voted for brexit, so unfair to say they all voted for it. And if you have paid attention to the news, the farmers in the EU were having major protests too just a couple months ago. The Eu isn’t perfect it has many flaws and they are having many problems and will continue to
@@oogabooga2337Brexit has nothing to do with it. Just look at what’s happening with farmers in Europe. This is the same thing but we’re being attacked from a distance direction. It’s a land grab by a socialist/communist government straight out the the Marxist playbook
Hi Oli - I've been thoroughly enjoying all your content over the past week. I don't imagine you'd have expected it to resonate with an Australian who lives in the inner-city but there you go... I wonder if you could do a video on some more details of your farm's financials, since from what you shared in this video I don't quite understand the unit economics. Perhaps this wouldn't be in your interest politically but I'm genuinely curious. From the video: Farm value: £2m (£1m for the yard + £1m for 10 fields totalling 120 acres) Farm generates: £7000/year To put your argument in financial terms, you're saying that the financial yield on farmland is so low that you're unable to compete with alternate land uses but you're providing a critical service to society in the form of nutritious food. My fundamental question is: how much food is generated on your 120 acres? As in, approximately how many people could it feed if farmed efficiently which, as you mentioned, you're in the best position to do. I did some back of the envelope maths with the help of ChatGPT which is probably wrong but using the crop rotation you mentioned of wheat, barley, turnips and clover the land there would produce around 2m kcal per year, per acre, on average, does that sound about right? So assuming ~2000 kcal per day per person, 120 acres would produce enough to feed about 350 people. My second question is how is that £7000 derived? I'm sure the total value of what's produced is much more than this, and then after taking out costs of production (perhaps also taking a salary yourself?) you're left with £7k per year. Roughly what is that margin between input costs and the sale value of the produce generated? I tried researching this and got numbers like £400/acre of revenue and £100/acre of non-labour costs (seeds, fertilizers, sprays, fuel) but I feel I'm misinterpreting those numbers since they seem low. Thanks for your time, appreciate the videos, Cheers
Beef farming is the lowest input of labour. Also the lowest return on investment but there is always a market for any size farm. It's also the most inefficient form of calorie production. On marginal land, very high / very low it's more or less the only option. Hth.
I think you make a mistake about this policy being misguided. the Labour party are perfectly guided they dont want small paraochial farmers who work hard and are independent of the state they want large corporate farms and to replace a lot of agricultural land with new builds and more failing attempts at solar.
A heartfelt review of the topic compared to some of the hysteria,but using your examples and dividing the tax bill over 10 years then dividing by the acreage it’s still coming out at less than a tenant would be paying and they’d have to generate a surplus over that to be viable. The fact still stands that people who don’t farm the land can benefit from the generous tax concessions.Its a sledgehammer to crack a nut but it’s started the discussion. The money tied up in land and housing stock is an economic stranglehold the sooner both land and property return to their true value of a place to grow food and live the better IMO.
Maybe one way to get around this, could be to start worker-owned, cooperative collective farms? The cooperative would never be inherited, so it would not have to worry about inheritance tax.
I have been involved in just such a cooperative farm in the local veg sector. Different set of challenges, but many positives. There is much to do with this approach and it warrants more consideration. I will be talking about this at the Oxford Real Farming Conference in January.
Enjoyed hearing your views on the video our farm is a similar size to yours and both my parents are in their 70s so its a bit of a worry for our family at the minute
Hey Oli! This has less to do with inheritance tax and is more concerned with the overall state of agriculture in Europe. Recent articles in the Guardian outline how productivity and wages have gone up for the sector, but those benefits are seen by the bigger farms who can benefit from economies of scale (as you pointed out before, bravo) These articles also outline how those bigger farms have capitalized on the good will generated by the farmers’ protests and are using it to push back on environmental regulations. As an outsider, it is hard to understand what small farmers can do to maintain their connection to the land while also helping to address the inequality that exists in the industry. Thoughts?
I would cynically say this derives from a desire to characterise farmers as dirty capitalists and push back on any goodwill we might have received. It is true some new technologies are only really available to larger operations - we have contractors do direct drilling as our tractors are too small for those implements - but as such we still have access to all the efficiencies of new technologies even though we are a very small operation. If that answers your question!
@@farmingexplained Thanks for your response! My reading was that the articles were attempting to delineate between large scale farmers and small farmers, painting the former in the light you described and the latter as victims who have had their livelihoods minimized and are being pressured to sell their farms. I recommend you check out these articles if you have not yet, they were released in the last week and seem to align with your critiques of current agriculture trends. They also mentioned the grassroots peasant movement Via Campesina, which is an organization that I would like to hear thoughts on. Cheers from NC!
I came here with a complete bias against you but you've gained a subscriber. You raised some very interesting points, specifically around people buying £1m of land to avoid IHT. However, I'm not convinced by the argument that someone with a £2m asset shouldn't pay inheritance tax (at a 50% rate, no less!) We're talking household wealth in the top 3-5% here. Granted it's asset rich, cash poor. In terms of food security - I do hope Labour increase subsidies to make farming the land more profitable. On the other hand, food isn't the only thing people need - they also need shelter. It would be incredibly short-sighted to send food production overseas, so I hope they find a balance. Edit: Maybe a tax on converting farmland would discourage it being bought up for non-agricultural purchases?
The fault lies with the Conservatives who lost their heads and became unelectable. A lot of people are suffering without representation now and have been for a considerable time - at least 10 years. The slow ratcheting up of tax has happened because the country has no plan. There’s no business case for Britain. It died in 2008. All that’s happening now is people shuffling about managing decline.
Yes, its essentially a generational wealth tax on land owning families. Not sure how this will end up, maybe this will reduce the price of land as there will be tonnes of farms that will get sold up. But likely the ultra rich will snap them up. (Just realise you mention this a bit, hadnt got to that point in the video😅) Perhaps a way to counter these taxes is to own your land through a family owned company, so that the land passes through generations without inheritance tax. I have no idea though, that may have major hurdles
Good explanation of the practical effect of the policy on a family farm. Unfortunately this is a political calculation for a government raising tax revenue. Farmers don't tend to vote Labour or have much support among their voter base; and few Labour MPs represent rural seats. It is possible that the policy might be reversed, depending how much protest occurs and what sympathy & support farmers get from the general public.
I'm not British so I don't have full grasp of the issues & full tax system. I am going to 'assume' that there is not ongoing land taxes on agricultural land because it's pretty common for primary production to receive exemption from property taxation - for many good reasons logistically. You raise some points at the start which don't really get brought up again. I understand you are a farmer, running a farming channel talking about issues from a farmers perspective and to your point about trying to argue with your mates at the pub, you're right it would be impossible to make a case that these policies will do any good for farmers. But given land is zero-sum game, and as you point out the value of land is not driven by its agricultural output, and that many people want land for non-farming purposes - be it housing, energy or other commercial purposes - and they ARE willing to fork out $$$ for it, why should the interests of the farmer, be they small or large, go above the rest of the economy on this question? What, in your view, would be the best policy towards redistributing land towards non-agricultural uses where it is very economically productive to do so, and would be the best policy at reducing the cost of this land to encourage more volume and opportunity for people to acquire land - whether it be for agricultural or other productive use. Maybe it would be a good thing if farmers sitting on valuable land had to lop off a fifth of their land to other buyers every generation. That's not a brutal as it really seems. How often do farms change hands anyway? 20 - 30 years? Who's to say what the value of a given piece of land or who owns it will actually be in 30 years? For what it's worth I do think more land coming to market would drop the value, as the price of land is set at the margin and in an extremely thin market with low volume and no incentive for anyone to sell the price can go stratospheric - something you see happen in land all the time. As you recognise the only people who really suffer from falling agricultural land values would be speculators and land hoarders - lower land prices would actually be good for farmers, and for anyone wanting to get into farming, and for anyone who also wants to buy the land for non-agricultural but still economically productive purposes. A more blunt economic means of redistribution that gives the rest of the economy access to land would be land value taxes paid annually that would force unviable farms out of business while their farmer is still alive. A deferred tax on death seems a good compromise. None of this is to say that the suite of reforms as they stand are perfect or even good. Your point that the million pound threshold would simply encourage more investors to gobble up land that they sit on and just lease back to the farmer as a means of tax evasion is completely true and a gaping flaw in the rules. To me that seems a problem with the idea of the threshold, and the way it incentivises behaviour of everyone towards gaming with the exemption to abuse what was originally just put there as a compromise for very small farmers. I think given the inherent exemptions, incentives and way in which land in general is used as a tax-advantaged investment for the wealthy, there's still a lot of flaws of design and inertia behind the current system that chokes off access to land to those who want it for productive purposes. But it does seem a step in the right direction, albeit, at the cost to the interest of farmers. Such is the nature of a zero sum game like land.
Non-farmer with a question. Couldn't you get around the inheritance tax by turning the farm into a limited interest company? Then couldn't you just change the shareholder and CEO and leave shares in the will without having to pay the inheritance tax? I'm assuming I'm missing something.
Good accountants and legal advice will help no end. IHT may be a good thing as it will force older farmers to move land to the next generation more quickly and this may bring new ideas and imagination back into the industry.
This seems pretty tragic, because it dooms small farmers. But there's the same problem you pointed out before in other videos and in this one; your farm is not economically viable. The huge 5000 acre estate has money for this, yours don't. The whole idea of family farms are, again, not viable as a business. Is there not a way for you to incorporate a company that owns the land and thus doesn't personally pass as inheritance from person to person?
I would imagine that Labour thought that taxing land inheritance *was* the closure of the loophole that lets the rich buy up land to pass to their children and avoid the inheritance tax. Possibly reflective of the fact that so few of our political class have set foot on a farm for anything other than being the landlord or a photo op. Anyway, I would further imagine they will indeed walk it back, possibly by increasing the cap on land value or by trying to come up with some other measure that isn't quite so speculative. Eventually.
Hello Oli. Love the channel. Would be interested to hear you talk about the government buying land from farmers, aka nationalizing farmland. I'm sure it would only lead to a socialist utopia and have no potential problems whatsoever.
You should be ok at the moment as if you also live on the land the limit doubles to £2million but that will probably change if the limit doesn't change each year in line with land prices. Personally I see the this new tax as a good thing for small holdings and those looking to become small holders.
this applies to very few estates once all reliefs have been applied for, will be a large sum for even fewer and with proper tax planning an even smaller number. a lot of nonsense has been spread about this. mostly out of poor communication from the government and unfortunately sometimes out of simple self-interested dishonesty.
That was the first thing I thought. They needed to target larger estates. Threshold needs to be way higher and some form of secured tenancies that survive land transfer.
Argument against USA food exports:- the rate per year of food poisoning in the USA from the CDC (20%) vs the rate from the UK FSA (2%), or from the WHO (10%).
You don’t have to explain the stupidity of this Communist policy to me.. But will the PPE graduates wrap their brilliant minds of the effect on food production here
great video! Kinda captures my general frustration with this political moment. These left (centre-right) remnants of former post war pro-labour parties across Europe are now so uninterested in talking to working class people that the Right can just pick up these simple & obvious policies and genuinely offer some sections of working class society better outcomes. They will figure this out about climate change too eventually. Plays right into their zero-sum world view
As a direcct result of this video, I have written to my MP about this. How effective this will be remains to be seen, as she is a city MP and I have no stake at all in the outcome, but this is absolute bullshit and has actually made me really fucking angry. I attached your video to the email. I hope you don't mind.
I was watching the budget live and thought of you as soon as I saw this part was annouced. I know you said it could have been better had it been implemented on land size rather than land value. Do you also think it may have worked had they somehow set it up so that only owner ocupiers were exempt? As a way of trying to prevent people like James Dyson from using the farmland exception as a way of protecting assets and thus pushing up the value of land. Saying that, I think that the current implementation may have been worse than taxing inherited farmland at the same rate as other assets as it still gives the insentive for rich people to put their money in farmland, so making it difficult for new farmers to buy in. And also messes up current farmers when they pass their farm down.
Just quick point, you also have your mum and dad’s personal allowance of 1 million if they are married. So you may be ok. There are also suggestions if the farm is in both mum and dad’s name, they both get 1 million but not sure if that’s true. Take some financial advice as you may be ok.
That was a fair summary of this situation. At the heart of this budget was the chancellor’s will to fill the22 billion black hole the pm says he inherited form the previous government which it certainly has to take some credit for but let’s not forget the previous government to that when Gordon Brown sold 395 tons of the national gold at an average price of 275 dollars per troy ounce which is now worth more than ten times that and the process of quantitative easing none of the parties are are without blame but this budget plans to make farmers pay for someone else’s mistakes.What it will certainly do is to add to the mental health of the farmers concerned when they are burdened with this debt.I strongly believe this chancellor looked at the countryside with only £signs in her eyes and it would be fair justice if she at least should fall on her own sword
I think this is an example of how tax laws that were intended to help certain industries have been hijacked by the wealthy and how once again it's working people who pay the price. For example, Clarkson initially bought his farm from/took advantage of a neighbour, that was forced to sell during the 2008 financial crash, so that he could avoid death duties. And it galls me that a celebrity, on a multi million pound contract with amazon, can gain the sympathy of the British public when the success or failure of his farm has very little impact on him, whatsoever. This Farming Life is a much better program about real farmers, but no one watches it because it's not fronted by a gobshite who shills for billionaires. Also, I would be very wary of Farage's support for farmers if he does the same to them as he did the fishing industry that he used and abandoned to get what he wanted.
because despite farms being worth alot, they dont make much profit. And taxing businesses that is so important to everyones daily lives to the point where they have to close forever is completely unfair. Its like the government going to the local chipshop on the highstreet and giving them a tax bill of a half million pounds so they have to sell their business. Without this tax releif nobody in this country will be farmers and we will lose complete control over our food production
@leeboss373 if I had a pension pot from my wages, that's already been taxed, my wages are taxed. I go to fuel station and taxed again on fuel ?there's multiple layers of tax on everything
The farmers are now getting the same treatment that the aristocracy got in 1910s. Inheritance tax is a spiteful tax that punishes long term property right between generations. Add 2 brutal wars into the mix and you can see how the aristocracy was almost completely destroyed. Instead of thousands of families in those stately homes, many were destroyed or given to councils or charities that ironically pay zero tax at all. They are deliberately attempted to crush small farmer so the farms get sold off for housing land or consolidated into bigger farms owned by people like Bill Gates. Whilst also destroying the country communities. The government regime is pure evil trying to dispossess everyone.
IF he lives 7 years. problem is also is that younger generstions have a high chance of divorce, so this means that older generstions might be a bit more hesistant to hand it over, and a lot of other reasons that means the older generation is hesistant to hand it down. this isnt the case with most farms tho, but it is with a surprising ammount
@oogabooga2337 Even if Olies Dad lives less than 7 years a proportion of the tax that would otherwise be due would not be payable. Further I think the farm house would attract a £325,000 (more likely £650,0000 if Oli's mother lived or lives in the home) exemption for being a dwelling house transferred to family to add to the one million that applies to agricultural property. I doubt if a 120 acre farm ( at current prices) like Olies would, in reality, attract anything like the IHT Olie thinks and with a bit of planning would attract none at all.
@ a 120 acre farm would have a land value of roughly £1.2 million. A farmhouse value of possibly 500-700k, and likely one or two cottages roughly (200-300k) and then any farm buildings like barns, grainstores, cattle sheds could easily add another 300-400k possibly much more depending on their size
@oogabooga2337 The cottage on the farm is likely a relic of the days of live on farm workers. It might still escape IHT if it is occupied by a retired relative . The sale of the cottage to pay IHT would not reduce the viability of the farming part of the business. 11 000 an acre is likely an overvaluation for the land in question but the very best grade 1 arable land can get close to that price. Of course if the farm is adjoining an urban area there may be some speculative value in the land as potential building land. However if that matrialised Oli would be quids in. If Olis' parents are married they each old an exemption on the farmhouse and on the agricultural land which doubles the non taxable allowance. Oli lives on a small farm which was a former dairy operation I doubt that there are massive grain stores I suspect there may have a bit of investment in converting the milking parlour and barn into a store to something we'll over 2 and half million The fact is things are not as gloomy as Oli thinks though they might be if the farm was 500 or 10000 acres. I would be surprised if his farm attracts or leads to any Inheritance tax.
I did warn you when you said you voted Labour in a few videos back. Now you and other hard working farmers will have to suffer. If it was just you and those who were stupid enough to vote for them that suffered, I wouldn’t worry. But as we’ve seen there are sadly some farmers who have taken their lives because of this and the party you helped put in power. So be careful what you wish for and I hope you will learn a valuable lesson out of this S show.
Not really. It's not as if labour have ever done something like this before, nor was such an idea floated by the party leading up to the election. The idea of higher taxes and a freeze on subsidies was fairly accepted. This policy is genuinely out of the blue, and unexpected as it is devastating.
Just as thatcher had very little to lose politically from dismantling mining communities in the 80s- so it is the case tha labour have little to lose by attacking farmers. This is because pretty much to a man, theyve voted Conservative consistently for the last 50 years. Im not defending the policy. Im just pointing out that in some room, somewhere- someone definitely said 'but this may destroy farming communities'- 'yes well, none of them voted for us anyway'. Its a sad outcome of the system, one could say- but if all these non-parasitic working class workers who favour the post-war settlement ever actually voted for the party who delivered it instead of brexitory - then the Labour party would have an interest in defending them.
just to reinforce your point on the potential impact on tenants,both two of grandfathers had their farms sold from under them in the 1930s,following death of the landlord.The land went on the open market,tenants rights were weak,they couldn't buy the farm,end of the business.
The Guardian wrote up a big investigation on this last year - its all on their website under "Cost of the Crown". The duchies of Cornwall and Lancaster (~71,000ha or ~175,000 acres) are considered private property of the monarch and so they keep all the revenue, which is ~£42m/year, with no corporation or capital gains tax. That's in addition to the £86m/year sovereign grant paid by the government from the public purse to maintain the royal family. The duchies are also exempt from some renting regulations and the duchy of Lancaster even claims the estates of its tenants who die without a will or next of kin.
@malkomalkavian from another Guardian article of last year, apparently £312m/year, though as the crown estate also "owns the seabed and half of the foreshore around large parts of England, Wales and Northern Ireland", it's set to generate ~£9b over the next decade from selling rights for offshore wind and oil/gas drilling.
Subsidies have to end for farming because they have increased property values to the level that it’s made farming uneconomic. If Australia and New Zealand can have an efficient, unsubsidised agricultural sector that exports substantially while having vagaries of weather and distances unheard of in Europe, then British farmers should at least be able to get by without burdening the taxpayer.
If the land is worth £2 million, and you are generating an income of £7000/year, why are you doing this? My suggestion is to close down the farm, sell the land, and put the £2 million into a tracker fund which would generate dividend income of around £60,000/year, with the capital growing with inflation at least over the long term. And you would also be free to spend time working on another farm that you don't own, and perhaps generate some income as an employee of another farmer. 10:05 "We don't parasitically live off rent - we produce stuff". That's true, but the value of what you produce is only £7000/year. In order to increase the value of what you produce (food) you need to reduce the supply of it (supply vs demand) either by restricting cheap food imports (which might be a good idea from a national security perspective), or closing down some of the UK farms.
@@TheWoodlandOrchard I'm sure that is true. Another possible solution to the problem might be to require farmland to be used for farming, with penalties for non compliance. This might reduce the value of farmland because that would be a disincentive for other potential users and uses. This might reduce the value of the land to below the inheritance tax threshold, meaning no inheritance tax would be payable.
@@aerialexplorer772 Something along those lines, yes. I accept targeting the assets of the very wealthy (I watch 'Garys Economics') but this budget doesn't do that. I think it's going to put more land into the hands of the corporations, taking it out of the hands of those who want to farm it. Farmland values should reflect its value for farming, not wealth protection. If the government worked for the people, it would be working to help create more small, viable farms on the basis that this diversity of production increases resilience in the system. That's true of any industry actually.
@@oogabooga2337 the only time is not is those that own such acreage in moorland etc where the productivity is rubbish. A sheep farm in noth Wales with a 1000 acres is not making notable sums of cash. That said their land may be worth a few bob
@@tisFrancesfault i know, theres huge patches of land in scotland of thousanfs of acres which is compartivley super cheap cuz u cant grow anything on it
This tax wouldn't work in Australia because our small farm is worth 2 million, 1000 acres just survivable, we avg 5t/ha crops but other big farms worth 10m might produce half that 2t/ha. My farming started 2000 today i seen 2 wet years, 7 years of drought n rest below avg, no way i could pay avg tax. If you have 2 million dairy farm, how could you afford to invest in new dairy shed, buy investing in new shed it helps you n economy. Also you have to upgrade to keep up in regulations, safety laws. All these rules, laws n financial decisions n wonder why we farmers struggle to stay afloat?
Being ignorant of your family situation and trying not to be crass while agreeing from afar this sounds like a horrendous policy, but…if your father is still in middle age and likely has a few decades left…is there any way you could come up 200,000 over that time from outside the farm? Not ideal I know but instead of outright inheriting the farm you would at least get to buy it for ten percent of the value. I had to buy mine from my parents here in America for about a third of the value, then install drainage and obtain equipment. I hope you can find a way.
First that 200k would also be taxed (and potentially at 40% as it could/likely would be seen as outside the agri relief). And as far as I can see atm I, or my siblings/cousins or Oli (guy in vid) would have to obtain like a 2 million pound mortgage... Bad enough but image the rates when you say you're at best make 30k per annum? Plus image the extra cost of say needing to buy a second hand 60k tractor, in that 30 year period?
@@tisFrancesfaultI don’t have to imagine. I face the same situation in America where we have expensive land, taxes and idiotic politicians too. I’m also from a poor family. I’m not that smart (Oli is smart) and I’m kind of lazy but somehow I’ve held on to the family land. Why would he have to get a two million pound mortgage when he’s going to inherit the buildings, machinery and land? He just said his estimated tax on all that would be 200,000 upon inheritance. What I’m suggesting is he come up with that money on his own, now, in the decades he has before he inherits. If he can save and invest ten percent of what he makes at a job away from the farm, one would be surprised what that could be in a couple decades. It’s not going to be fun. It’s going to downright suck at times when your friends go on holiday but it can be done. It would be better if it wasn’t necessary but I want farmers everywhere to be able to keep their land so I’m trying to offer a modest suggestion.
@@aaronswanson6719 Well if hes to buy the farm, he'd need to buy it in full (selling cheap is not allowed iirc as its seen as tax evasion (and you may have to contend with capital gains taxes) Then the parent would likely be taxed at a the full 40% of the sale which is an extra loss). Thus like 2 mil. Hes from iirc the upper midlands and the modal average income is like 20-something k. the UK median is like 34-36k or so. So in Olis case, he'd A) have to buy outright at 2 mill or save anywhere from 100pc to like 60ish pc so of his income so he has enough to pay the 200k upfront. assuming fates willing his farther lives a decade more. this would leave him destitute during the best years of his life and no better off for it. Its literally paying a 5th of a million for the privilege to earn 10-30 grand. If my brother saved 10k a year for the next 20 years he'd have enough. but again destitute. and then would be a decade from retirement age... So my nephew would then have to have 200k in todays money by his 3rd decade. Again, its insane. Again, we're fucked. it is over.
@@tisFrancesfault well if it’s that bad, I guess you best figure out what chunk of the farm you want to sell off, rent the rest to a larger operator and find another way to make a living and enjoy life. It happens here all the time and no one cares if another small farmer leaves the scene. Since Oli only appears to be in his early 20’s, I assumed his dad would be mid 50’s and have 2-3 more decades before the inheritance came during which time Oli would have to make a living off the farm anyway. I hope you guys can get your government to reconsider their plans. I do think it’s horrendous.
The farm won't be hit by a big inheritance tax bill at current land prices. (10 to 11000 per acre) Oli's farm is only 120 acres. The farmhouse would be not be caught because dwelling houses have an 325,000 exemption attached to them. An exemption that is doubled if was occupied by a married couple. Oli does not appear to have too much expensive machinery and the outbuildings on a 120 acre farm are likely to be modest. If Olis' family remain worried about inheritance tax they could transfer some of the assets to Oli now. Perhaps the paddock that has the Bakewell sheep and a shed for lambing.
Thanks for the video I always buy British produce but I wish farmers would not put up Buy British signs when they do not themselves e.g. driving an Audi
"A married couple owning a farm together can split it in two, meaning it qualifies for £2m of agricultural property relief, plus another £500,000 for each partner if a property is involved." So in reality most farms will have 3 million in relief.
@@leeboss373 No, as far as I am aware. It should acted like inheritance tax for a normal (married) couple where you can either give the share to the child when the first parent dies up to the threshold tax free or the widower inherits the relief for when they die. At least this is what I have read and what my family accountant has told us
@@harriershadow5880 I know my mates dad has signed over his property to his 3 kids. Not sure on the details, I think you can do that to avoid paying inheritance tax 7 years before they die.
I'm wondering if a Georgist land value tax might be necessary to bring down the excessive land prices/rents - it's particularly acute in an urban setting where a substantial part of a property's cost is the land value versus the capital investment (i.e. things you build on the land), and without the tax on land value, someone can make money from land speculation over the long-term (since demand for land goes up and supply is static) Rural land is overvalued because of the urban demand - because farmers aren't making money, farmers need tax relief, or at least some way of being taxed that doesn't kill the proverbial goose. Small-hold farmers don't leech, they produce!
Ya, I was thinking he is explaining George's thesis on land and poverty to a T as he is living it. But being caught in the middle of the transition would be a deathblow, so you'd need something like a 5 year moratorium on some uses to give prices time to adjust. It also calls into question corporate ownership as there is never an estate tax levied on them so on a long enough timeline, they own all the land.
As the title card suggests, its over. This measure is devastating. Like I defend death duties of liquid assets etc too. Though I always maintained there needs to be better rules. Principally duty should be paid on the sale of a family home or farm land, not an inherent tax on the transfer. ( I often propose the idea that a cleaner buying a slum house in london a century ago, at near nothing, shouldnt be penalised that that home, of for examples sake, a family of low income cleaners to this days, home is worth a million quid; unless sold. if ten years later you sell the property then sure pay the duty. but the inherent duty, only forces out the poorest simply due to circumstances they have no control over. The only thing I see happening is that the family farm of about 100 acres or so (i do forget) and much like your own very modest is proportionately hardest hit) will need to be sold off to the bigger, wealthier, neighbouring farms. All I see is the reintroduction of aristocratic land owners. Right now, im exactly like yourself regarding the Labour party. Im not a member, but I did defend labour leading up to the election, that tough choices are likely. But this is not a tough choice, this is small holdings having their throats slit as sacrificial bulls. And as far as I can see it only enriches wealthily landowners. And I especially pity the farms in the south east, near London, where inherent land value is horrendous - regardless that its disconnected from agricultural value.
I fear this is a horrendous take, where the labour party is pandering to the worst elements of right and left wing elements. its a pain in the arse for the wealthiest land owners, but tolerable, yet seen as screwing "bastard (smaller) landowning farms" panders to the the urban left. Im optimist in that a farm can earn on a 100 acres total, 30k a year, if hard worked and optimised ( crop some beef and hedge cutting (which not everyone can do). but having to take a 200k loan/mortgage JUST TO PAY DUTY, is in no way feasible for the next generation. We are fucked.
"Proportionally the hardest hit" What nonsense. Ollie' farm won't be paying much or any Inheritance tax. 1 million allowance for agricultural land, the farm house will attract a 325,000 allowance. The allowance would be doubled if the farmhouse is or was occupied by Ollie's parents. The family could, if necessary, transfer land to Ollie before their death etc etc
Agree the issue is having a different threshold for IHT for a specific asset class is causing a lot of the issues and that with their new scheme still allowing a significant tax benefit they'll have the worse of both worlds. Farmland values are in a bubble created by all the entrance of unconnected people seeking tax relief and this change might break up the largest estates but 1m tax free and 20% on the rest will still be rational choice for many. A cynic might look at exactly who labour is focused on and wonder if they aren't aware that the main beneficiaries of this would be people who have generated large paper profits in housing and income. They would find the outcomes of a £1m soft cap very appealing, enough to be worth doing but not enough that they're not getting outbid by people hoovering up large estates. Upper middle class London retirees looking to sell their home worth a couple million and move out of the city can trade it in for a house on the coast and a small farm to rent out and not have any IHT. Your grandfather's/father business being worth £2m on paper but generates £7k in profit annually is a byproduct of that. Your solution of capping it based on the land requirements of an average farm would face the same issue- if farming can continue to be used as a loophole to avoid IHT then the value of farming assets will continue to be detached from the reality its ability to generate value. If farming land attracted the same IHT as any other business then the next generation could take on the business without being outbid by an investor class. Attach a specific capital gains tax on changing land classification to avoid long term land speculation and the £7k net profit (£58 per acre) business would be valued accurately. Of course you'll still have to deal with the existing housing being unaffordable (assume that was included in the £2m valuation) but that's a different problem.
In Britains neighbours (Ireland, France, Holland, Belgium, Noway ) the farms are much smaller, and there is a critical mass of mostly Peasant farmers. There are fewer estates. It is good to know that this eventually changed in Britain ( though Scotland is a complete exception as the peasantry got nothing). Regardless of their differences, they stick alongside another when dealing with ugly actors...sorry...I meant politicians....mmmmm.... Plus the families of these farmers. You get a serious opposition in these countries.
Not watched the whole video yet so may be a useless comment but could you get round this by buying the farm from your dad for like a quid or something when he’s ready to pass it on?
My mates dad has signed over his property to his 3 kids. Not sure on the details, I think you can do that to avoid paying inheritance tax 7 years before you die.
@@leeboss373 not at all the case. Taxes suck, even for those that support taxes. but this isnt just more taxation on farmers (not new to farmers), however this is pure FU energy. Like I said I defend the idea of designated family property immune from taxation. Because it can be just in many situations.
As an American who does not understand the history and innerworkings of your tax code, my heart goes out. I hope a correction comes quick before people are forced off the farm.
The problem is they count small holding as farms then suggest most farmers are effected. Really many of small holdings are actually the land owned by rich people that made money outside of farming.
I'm not a farmer but realise what a huge - and harmful- impact the new tax regime with have on UK farmers. Asset-rich, cash poor is truly an apt description of all my farming friends. Labour don't understand what a catastrophic impact this will have on "small" - and large - farms alike.
Fellow Labour supporter here. I work in the countryside in conservation, come across a lot of anti-farmer rhetoric amongst the left. So glad I found your channel, really informative in answering the questions I have about the farming business. Can’t wait to watch more. I will read the book - and also, Reform’s agricultural policy. Have never given garage a second glance before, so this just goes to show that Labour is pushing their own supporters away
Stop voting against your interests then. I bet all of you voted out
Buyers regret now?
When will people learn that anything from the left doesn’t work and has a great detriment to the people?
You only have to read a history book (even one of these modern day ones) to learn that socialism just kills people and people to progress.
Any farmer who voted Labour I do hope it affects them more, just like the old who did the same.
As for “it will not affect 85% of farmers” is another lie that labour has told.
There is no farm with less than 100 acres that makes a profit.
It was only about 10 years ago that a farm of a 1000 acres could turn a profit, now it’s more like 2000 acres.
So at current prices 2000 acres at £10k an acre is worth £20m.
That’s without machinery, buildings and the farm house itself.
This is nothing more than a land grab by the government.
Oh that reminds me of Starling on the Ukrainian farmers.
@@NKY151voting out has nothing to do with it.
This is state out the communist playbook.
Just look at the EU and what’s happening to their farmers.
Same thing but a different attack pattern.
If you sell land to pay for inheritance tax you will also pay capital gains tax on the land sale so it’s more like 40% tax.
which ever the greater we paid
Yes, it's a total disaster
the stupid thing with capital gains tax is there is no allowance for how long the asset is held now.
@@TheBrick2 so no indexation allowances for pre 82 gains etc
@@lizwebstersbf A government that is pro EU it just proves that remoaners don’t care about British agriculture.
I farm just over a 1000 acres in Cumbria but yet my farm is worth less than your 120 acres. When I tell people we have 1000 acres they assume I’m loaded however nearly 50% is peat bogs, moss and heather. I haven’t been on some parts of it for 35 years as no sheep ever goes on it. So the size of farm isn’t an argument. Location is also a major factor.
Tbf, I do believe he's talking about relative land to himself. And seems to accept the issue of regional land value as well as comparative land production. He's just trying to be concise here. I'd be prone to have said something similar. Where I live a 1000 acres would mean you're well off. 1000 acres in North Wales, Cumbria and much of Scotland? Fairly screwed too.
An excellent overview, with a great historical perspective. Thank you.
Popped up a link on the Farming Forum as this needs wider viewing.
The limit has been set by ignorant urbanites who think that they get it. They show 1) no understanding of locked/up capital 2) the income generation of 'ordinary' farmers or 3) any of the implications or loopholes of what theyve done. I despair
THANK YOU. I live in a small rural town just outside London and was surprised that the allowance was only £1M. My dad's ex-council house is worth £500K, and there are plenty of houses worth £1-2M.
I hope that there may be small print to allow exemptions for inheritance to children who are going to farm the land themselves. fingers crossed
There are none, that's the point, its a disaster.
Inheritance tax on agricultural properties is simply a way for the government to force more farm land onto the market for the benefit of speculators and investors
Probably what Bill Gates told them on his visits to No.10 over the last few weeks. He was accompanied by Larry Fink, CEO of Blackrock. You Will Own Nothing & Be Happy don't forget.
a new form of land clearances the UK history is known for...
Yay capitalism...
Why would anyone invest in land if the inheritance tax is so terrible? Unless it was still the best form of tax avoidance? In which case, why are some farmers complaining?
@@IntermediateSolutions the money is made in developing the land. Housing solar farms and environmental rewinding projects. Not in the production of food.
The other part of this issue that most non rural people won't connect is the long term change to food quality. British farming produces some of the safest food in the western world. People need to understand that this new threat to British agriculture will come round to affect them. Imported food with ever increasing additives - sugar, hormones and agri chemicals some of which are banned in the EU are causing a cancer epidemic which is directly destroying the NHS. It's not completely bad management that is hurting the NHS , it's the diet of our population. Hurting British farming in this way will only ultimately hurt the people of Britain. That's why the average Brit should care about this.
Time to scrap the nhs then,
@user-pd6pb2uq8r sorry didn't perhaps make my point very well. The NHS is the best thing about Britain and is my strongest wish for all of us thar it continues. Just saying that the farming community in Britain in general still cares about the animals and crops it produces. Destroy our farming system and introduce more industrialised farming scale and food quality will suffer as is the case in the US. Poor diet brings obesity cancer and all sorts of health implications that overload the NHS.
Our farming system matters to everyone.
Just trying to make people understand why a tax change to what they might see as wealthy business people will ultimately affect them.
This is a big picture that needs joining up.
@@edwardbichan9729 tbe nhs is crap, its a burden on Workers and healthy people, its time health care was private in the uk
Its the same with social housing, only the dregs of society get them and drag the areas down
You explained that very well. It's devastating to realise the implications of what policy is doing to our farmers. If and when farmers need to sell land, can they break it up into small plates that are affordable for small holders who want just a couple of acres to set up market gardens? Maybe doing this would stop corporates buying it all up and allow many small scale regenerative food producers to buy land. Cheers J
Wow , you are a clever and thoughtful chap , well done .
The £1m tax free is in addition to the personal tax allowances which can add up to an extra £1m when adding in spouse allowance and passing to a child of the deceased. So actually in your case you probably will have very little tax to pay, maybe 20% on machinery at most.....and judging by the john deere that shouldn't add up to a huge amount.......!😉 (that's not a dig, I've got an old Zetor!)
Brilliant job with this well done
Very good summary. We’ve been left in a very serious situation. 5th generation on our farm, ROI is very low but we could end up with a 1 million tax bill. That would be the end of us
11:05 the revenues of the Crown Estates are paid directly to the Treasury, so are taxed at 100%. If you roll the Sovereign Grant into the consideration of the Crown Estate, the tax rate is about 75% still. If the Crown Estate were broken up and put into private hands, the revenues to the treasury via income/corp tax (and IHT every generation) would be massively diminished... Basically, the Crown Estate is effectively nationalised already...
Your presentation is spot on and amazingly coherent. Thank you for doing this and please circulate it as widely as possible. This government has no understanding of the countryside or of running a business and doesn't seem to be listening when people like you so clearly set out why the proposed changes would be devastating, as well as counterproductive. This policy was not even discussed with the NFU in advance to assess what impact it would have. In fact, they specifically said they would not do this and blatantly lied. The returns on farming are terrible already and it is massively stressful but we do it because it is our home as well as our livelihood. Family farms will disappear as their farms are divided into either uneconomic hobby "farms" of a few acres or bought up by huge companies. Farmers would strike if they could but we can't - our animals need looking after, as do our fields, footpaths, hedgerows, woods, streams etc. It is frankly insulting that farmers don't appear to count as "working people".
As you show, it is obvious that these payments on death would be completely unaffordable due to the low profitability or loss-making nature of most farms. The government cannot pretend not to understand this which makes you question their motivation for doing it. The tax it will raise will be dwarfed by the damage it will do for decades. These changes would affect not only farmers but all but the smallest family-owned businesses. They say they want to bring growth but that is laughable. Who is going to set up a business if this is how you are treated? Who is going to work on a farm from dawn to dusk just to try (unsuccessfully) to pay HMRC? I just don't understand what they are thinking and cannot work out how we can make our farm work. What they have achieved is to create a suicide window whereby some elderly or unwell farmers desperate to pass their farm down will take their own lives in order to protect their families and farms. They were told if they worked until they died, they could pass their farms on so many have continued working well beyond when most sensible people would have retired. So much for a government that values people's mental health, maybe farmers don't even count as "people", let alone "working people". If this government had a shred of respect or consideration for farmers, they would not have behaved like this. I honestly expected better and less cruelty from Labour.
I wish you and your family the very best on your farm - you seem just what farming needs. However, sadly, you are also exactly who this policy may well affect, which shows what a travesty this is.
Very well explained and presented, as usual
Once you lose an industry its difficult to get back. I grew up in a farm so know the hardships. But my kids have no idea and we live in a rural area. My brother lives in a town and his kids don't know what a farm is. Food is the life blood of us all. We all need to eat and people are so much healthier eating proper food not factory produced crap.
I totally agree. Food from a farm is better than anything a factory can make.
I was interested to see if Labour was going to challenge IHT for farmers. Let me put a couple of debating points. My wife and I have worked all our lives to have a very nice house with some land in Kent. When we die, there will be IHT to pay. If I had kept my business, then there would have been IHT to pay on the value of my shares. Why should farmers be different?
There does seem to be this thread with the farmers I know where they are proud that their are third or fourth or whatever generation on their farm - all untouched by IHT. Family-owned companies that I know have to plan ahead for IHT and/or pay the IHT bill; they may be fourth generation but they have had to pay taxes like the rest of us.
I know of many farms, whole or partial, who have been purchased by “London bankers” solely because their investment is protected by IHT. Look at Dyson as an example. Should these people be able to avoid paying IHT when every “normal” person has to?
I wouldn’t be a farmer for the world. At the mercy of weather and, mostly, big buyers like mills and supermarkets. I think most farmers work very hard for small gains. However, when I hear a farmer talk about having to sell up because they can’t break even; a farmer talk about their small farm not being able to compete; then I think of every other industry - from leatherworker to rope makers to coal mines - that have had to adapt to new realities. It’s not nice but I don’t think you can fight economic realities for ever. No farm, or farmer, has a right to keep on farming; just as no manufacturer has a right to keep on producing. Every business has to pay its way. If a mountain sheep farmer can’t break even or better, should the consumer pay extra just to keep that farmer doing what they want to do?
Food is very cheap these days compared to when I was growing up 60 odd years ago. By that, I mean as a percentage of average income. Again, when I was growing up, there were large buyers of produce (who supplied the local grocer, greengrocer, butcher etc.) but the power of the supermarkets is such now that they determine the survival or not of many farms. However, detail a better system - price controls? (That’s never worked in any country).
I don’t think that this Budget, in respect of IHT on agricultural land, has got it right. At all. I think it is typical of politicians of any and every persuasion that their prejudices rule the head.
As a farmer it’s always good to hear other peoples view and yours is very reasonable .
@ thank you, I appreciate that. I was trying to put over several different strands of a complex situation - some of which conflict with another. On one side of us is a large orchard of eating apples. I know the farmer well as issued to play rugby with him. Their main acreage is arable but they diversified into fruit perhaps 10 years ago. He bought the orchard knowing it had to be grubbed out of the old Bramley. So, £250,000 later, the orchard had the new style of trees, grown along wires. But, he had to wait 4 years until the trees produced an economical crop. In that time, he was paying a lot of bank interest. Even when the first crop was picked in the late Autumn maybe 5 years ago, it had to go into cold store. Then months later, the supermarket decided it wanted some and so it went to packers and then onto the supermarket warehouses. Finally, in can go an invoice - and then Tesco take 120 days to pay. That’s the Tesco that takes only cash in and yet takes 4 months of free credit from its suppliers.
On another side of us are arable fields left wild for the last 2 years by another farmer. Why? Because he can’t make it pay. He can sow cereals but the recent harvests have produced grain only graded as animal feed - and that means a loss for the farmer; so, it’s been left wild. Very nice for the birds, the deer etc. but not making any return for the farmer.
There is a base of ~£2.6m for a couple.
Raising 100 beef cattle should keep one person employed for 35 hours per week. That's probably the £7k net income, if all goes well! But there are subsidies too, until recently they were worth another £10k. Also vat rebate could increase this. Perhaps an ok wage for being your own boss if you enjoy the work. Although that provides revenue for local businesses in outgoings from the gross income. That's without pension & sick pay & investing in the farm.
Although there is the capital value which can be passed on tax free up to £2.6m for a couple... YMMV.
Renting the land should raise £10-£20k...
The value of the land is unlikely to decrease as it's still a good tax investment!
This is a very interesting video that explains the position from an Agricultural perspective very well. However, you have ignored that fact that the problem is not limited to farmers. Business property is to be taxed in the same way and business owners will suffer in exactly the same way. If they run a business from property they own, it will be a mill stone around the neck of anyone that inherits it. This will kill off many businesses in the same way it will kill off many farms. This Labour budget was a sad day for the UK economy!
Well said young man
The craziest thing that I take from this is how detached from its agricultural value land is. Wasn't Ricardo's land value tax aimed at rectifying this? I don't know a huge amount about it but something I would like to explore more myself. But no party even seems to see this as a problem.
Wealthy people bought/buy farms to avoid inheritance tax. At 50% rebate over £1.3 -£2.6m, they will still probably buy it. & There were/are subsidies just for owning farm land.
I was immediatly wondering what you thought about this budget
I’ve mulled over all the different ‘strike’ ideas, and I think the best response to Rachel Reeves and ‘Labour’ would be for every farming business in the country to sit down with their accountant long before April 5th / year end, and work with them to actively reduce their tax bill to as little as possible, as in cut it down, hard.
If we want to ‘strike’ in protest, then strike against those in HM Government and the Treasury who seek to harm US, don’t strike against consumers.
So make use of investment allowances, max out pension contributions, IHT and CGT mitigation, add partners to spread profit and bring youth into each business earlier than planned, farmers over 60 to gift assets now instead of waiting; claim for *every* tax deductible item, claim every penny of VAT on every input and ‘farmhouse repairs’ etc etc.
Be proactive, and tell your accountant that you want to reward Reeves spite with your own. Keep it legal, but make sure YOU see the benefits of actively planning to reduce tax, instead of Reeves thinking she can just pull our tits to milk us dry without any pushback.
Its a misunderstanding of value and price. The price of land is set by, as you correctly point out by people and companies using agricultural land for non agricultural purpose. The value of land for a farmer is in producing food, the price of which is set by commodity markets which in turn require low prices to allow the rest of industry to operate on top of them.
Money is a means to facilitate trade between different goods. This as with most "good / happy deals" relies a symmetric relationship, where asymmetry exists there exists the extortion. When land comes to market there is intense asymmetry formed by the difference in value between the land as agricultural and land as an asset.
This is sloppy legislation, as I'm sure you're aware, the reason for the 'cracking down' is that the largest agricultural landowner in the UK is James Dyson (yes, the vacuum guy), it had become a way to avoid inheritance tax, with many farmers being forced into tenancy and diversification, further bolstering the value that the wealthy can hide from HMRC with little benefit to farmers. As you pointed a out, the previous system was abused by the wealthy, now it can still be abused by the wealthy, but denuded of the originally intended benefits for farmers.
The solution for many years has been setting up a trust (you should look at setting one up for your farm if you have not already), but there needs to be legislation to allow for a farming estate trust that allows specifically working family agricultural concerns, allowing equipment, livestock and other requisites. It is child's play to write legislation that stipulates tax exemption based on use over a period of time.
The continuing problem with all tax systems is that they are most easily navigated by the people who should be paying the most and least navigable by those who cannot afford to.
Laws are like spider's webs: If some poor weak creature comes up against them, it is caught; but a big one can break through and get away." ~ Solon
@pauleaton6908 but it needn't be this way, good laws are possible. The UK and EU have some of the best farming practices in the world, some of the legislation is silly and people often focus on that, but we have excellent animal welfare standards and hygiene standards so high that they had to start adding dirt to Swiss cheese to get their holes back (interesting story, look it up).
The EU is often bashed for its failings, but rarely lauded for their successes. The reason all phones now charge from USB is because the EU insisted that all phones be capable of it to reduce charger clutter and e-waste. Apple obeyed the letter of this law, but not the spirit.
There are good laws out there and good laws can be made, we are not living in a dystopian hellscape, no matter what the Mail may have you believe. The alternative to bad laws is good laws, not lawlessness. The pain with which Olli decried having to agree with Farage was not full throated support for the man, but dismay that there are sensible policies to be had, but only coming from someone with whom he shares little common cause outside of.
The wealthy abused a good law meant to protect farmers, Labour's solution was to remove the protection rather than refocus its attention. Rather than vote reform, we need to get sane parties to refocus their attention.
I've head this thought for years now, somehow there needs to be a designation of "Dedicated Farmland" that by law has to be used for agriculture of some form for majority of a the years over a period, renewing at the end of each period, and it would have to be worked atleast in part by the owner. I feel like this would ensure that the land value is in line with what you can produce from it and that would also ensure that younger people who wants to become farmers has a reasonable chance to. And if you do this you can make the inheritance of the land completely tax free on the condition that they also work it. Haven't thought it through completely but I know that something has to change.
We have something very similar to this in Japan, and it's worked pretty well over the decades in preserving Japanese domestic rice production. The one exception to this is that with the ageing population and fewer younger generations taking up farming, it makes it more difficult to repurpose the land and leads to abandoned fields. Still, the land reform policy that the US occupation put in place in Japan should be a textbook example. It broke up the aristocratic holdings and gave it directly to the tenant farmers with restrictions on the reselling and repurposing of agricultural land. It pretty much created the Japanese middle class overnight. Now we just need a way to incentivize younger people to work these fields.
Good idea 👍
I'm sorry for all our farmers after this horrendous budget. But you should also know that the modern labour party are not the same as those who built the welfare system and other reforms after the wars.
Correct they are fascists with red ties as opposed to the previous fascists with blue ties
What did farmers vote for? That's right. Removal of EU exports and support. Fools all of yoy
@@NKY151it was just a little over 50% of farmers who voted for brexit, so unfair to say they all voted for it. And if you have paid attention to the news, the farmers in the EU were having major protests too just a couple months ago. The Eu isn’t perfect it has many flaws and they are having many problems and will continue to
@@johnfowler4820the old fascists were red.
Learn where the name of fascist comes from.
@@oogabooga2337Brexit has nothing to do with it.
Just look at what’s happening with farmers in Europe.
This is the same thing but we’re being attacked from a distance direction.
It’s a land grab by a socialist/communist government straight out the the Marxist playbook
Hi Oli - I've been thoroughly enjoying all your content over the past week. I don't imagine you'd have expected it to resonate with an Australian who lives in the inner-city but there you go... I wonder if you could do a video on some more details of your farm's financials, since from what you shared in this video I don't quite understand the unit economics. Perhaps this wouldn't be in your interest politically but I'm genuinely curious.
From the video:
Farm value: £2m (£1m for the yard + £1m for 10 fields totalling 120 acres)
Farm generates: £7000/year
To put your argument in financial terms, you're saying that the financial yield on farmland is so low that you're unable to compete with alternate land uses but you're providing a critical service to society in the form of nutritious food. My fundamental question is: how much food is generated on your 120 acres? As in, approximately how many people could it feed if farmed efficiently which, as you mentioned, you're in the best position to do.
I did some back of the envelope maths with the help of ChatGPT which is probably wrong but using the crop rotation you mentioned of wheat, barley, turnips and clover the land there would produce around 2m kcal per year, per acre, on average, does that sound about right? So assuming ~2000 kcal per day per person, 120 acres would produce enough to feed about 350 people.
My second question is how is that £7000 derived? I'm sure the total value of what's produced is much more than this, and then after taking out costs of production (perhaps also taking a salary yourself?) you're left with £7k per year. Roughly what is that margin between input costs and the sale value of the produce generated? I tried researching this and got numbers like £400/acre of revenue and £100/acre of non-labour costs (seeds, fertilizers, sprays, fuel) but I feel I'm misinterpreting those numbers since they seem low.
Thanks for your time, appreciate the videos,
Cheers
Beef farming is the lowest input of labour. Also the lowest return on investment but there is always a market for any size farm. It's also the most inefficient form of calorie production. On marginal land, very high / very low it's more or less the only option.
Hth.
There is also a subsidy to top up the £7k, or at least there was prior to Brexit, just for owning farm land
Excellent video. Keep at it!
Go to your solicitor, there are loads off ways to get round it, i wudnt worry too much but deff get good advice on it
This seems like how you get a bunch of small family "farms" (more like large fields) and a few large corporations buying up all the land
Good factual video about a situation you ,me ,us shouldnt need to be talking about. Great work but they are against us
Beautiful video!
I think you make a mistake about this policy being misguided. the Labour party are perfectly guided they dont want small paraochial farmers who work hard and are independent of the state they want large corporate farms and to replace a lot of agricultural land with new builds and more failing attempts at solar.
they also want to kill off farming as farms have emissions
We don't need farms as you can free food in the westminster canteen
Yeah, that sounds about right.
A heartfelt review of the topic compared to some of the hysteria,but using your examples and dividing the tax bill over 10 years then dividing by the acreage it’s still coming out at less than a tenant would be paying and they’d have to generate a surplus over that to be viable.
The fact still stands that people who don’t farm the land can benefit from the generous tax concessions.Its a sledgehammer to crack a nut but it’s started the discussion.
The money tied up in land and housing stock is an economic stranglehold the sooner both land and property return to their true value of a place to grow food and live the better IMO.
Maybe one way to get around this, could be to start worker-owned, cooperative collective farms? The cooperative would never be inherited, so it would not have to worry about inheritance tax.
I have been involved in just such a cooperative farm in the local veg sector. Different set of challenges, but many positives. There is much to do with this approach and it warrants more consideration. I will be talking about this at the Oxford Real Farming Conference in January.
Enjoyed hearing your views on the video our farm is a similar size to yours and both my parents are in their 70s so its a bit of a worry for our family at the minute
Great video Oli! Hugs!
Thanks for this analysis. It's disappointing to hear.
Hey Oli! This has less to do with inheritance tax and is more concerned with the overall state of agriculture in Europe. Recent articles in the Guardian outline how productivity and wages have gone up for the sector, but those benefits are seen by the bigger farms who can benefit from economies of scale (as you pointed out before, bravo)
These articles also outline how those bigger farms have capitalized on the good will generated by the farmers’ protests and are using it to push back on environmental regulations. As an outsider, it is hard to understand what small farmers can do to maintain their connection to the land while also helping to address the inequality that exists in the industry. Thoughts?
I would cynically say this derives from a desire to characterise farmers as dirty capitalists and push back on any goodwill we might have received. It is true some new technologies are only really available to larger operations - we have contractors do direct drilling as our tractors are too small for those implements - but as such we still have access to all the efficiencies of new technologies even though we are a very small operation. If that answers your question!
@@farmingexplained Thanks for your response! My reading was that the articles were attempting to delineate between large scale farmers and small farmers, painting the former in the light you described and the latter as victims who have had their livelihoods minimized and are being pressured to sell their farms. I recommend you check out these articles if you have not yet, they were released in the last week and seem to align with your critiques of current agriculture trends. They also mentioned the grassroots peasant movement Via Campesina, which is an organization that I would like to hear thoughts on. Cheers from NC!
@@FerminINClvc in the UK is the lwa.
@@IntermediateSolutions Thank you! I will look into their organization
I came here with a complete bias against you but you've gained a subscriber. You raised some very interesting points, specifically around people buying £1m of land to avoid IHT.
However, I'm not convinced by the argument that someone with a £2m asset shouldn't pay inheritance tax (at a 50% rate, no less!) We're talking household wealth in the top 3-5% here. Granted it's asset rich, cash poor.
In terms of food security - I do hope Labour increase subsidies to make farming the land more profitable. On the other hand, food isn't the only thing people need - they also need shelter. It would be incredibly short-sighted to send food production overseas, so I hope they find a balance.
Edit: Maybe a tax on converting farmland would discourage it being bought up for non-agricultural purchases?
The fault lies with the Conservatives who lost their heads and became unelectable. A lot of people are suffering without representation now and have been for a considerable time - at least 10 years. The slow ratcheting up of tax has happened because the country has no plan. There’s no business case for Britain. It died in 2008. All that’s happening now is people shuffling about managing decline.
It died in 1939.
Yes, its essentially a generational wealth tax on land owning families. Not sure how this will end up, maybe this will reduce the price of land as there will be tonnes of farms that will get sold up. But likely the ultra rich will snap them up. (Just realise you mention this a bit, hadnt got to that point in the video😅)
Perhaps a way to counter these taxes is to own your land through a family owned company, so that the land passes through generations without inheritance tax. I have no idea though, that may have major hurdles
That is what was done in the past before the agricultural land exemption was introduced in the 1980s
Best solution is to put exemption for anyone earning 80% of their income from farming.
Good explanation of the practical effect of the policy on a family farm. Unfortunately this is a political calculation for a government raising tax revenue. Farmers don't tend to vote Labour or have much support among their voter base; and few Labour MPs represent rural seats. It is possible that the policy might be reversed, depending how much protest occurs and what sympathy & support farmers get from the general public.
I'm not British so I don't have full grasp of the issues & full tax system. I am going to 'assume' that there is not ongoing land taxes on agricultural land because it's pretty common for primary production to receive exemption from property taxation - for many good reasons logistically.
You raise some points at the start which don't really get brought up again. I understand you are a farmer, running a farming channel talking about issues from a farmers perspective and to your point about trying to argue with your mates at the pub, you're right it would be impossible to make a case that these policies will do any good for farmers.
But given land is zero-sum game, and as you point out the value of land is not driven by its agricultural output, and that many people want land for non-farming purposes - be it housing, energy or other commercial purposes - and they ARE willing to fork out $$$ for it, why should the interests of the farmer, be they small or large, go above the rest of the economy on this question?
What, in your view, would be the best policy towards redistributing land towards non-agricultural uses where it is very economically productive to do so, and would be the best policy at reducing the cost of this land to encourage more volume and opportunity for people to acquire land - whether it be for agricultural or other productive use.
Maybe it would be a good thing if farmers sitting on valuable land had to lop off a fifth of their land to other buyers every generation. That's not a brutal as it really seems. How often do farms change hands anyway? 20 - 30 years? Who's to say what the value of a given piece of land or who owns it will actually be in 30 years?
For what it's worth I do think more land coming to market would drop the value, as the price of land is set at the margin and in an extremely thin market with low volume and no incentive for anyone to sell the price can go stratospheric - something you see happen in land all the time. As you recognise the only people who really suffer from falling agricultural land values would be speculators and land hoarders - lower land prices would actually be good for farmers, and for anyone wanting to get into farming, and for anyone who also wants to buy the land for non-agricultural but still economically productive purposes.
A more blunt economic means of redistribution that gives the rest of the economy access to land would be land value taxes paid annually that would force unviable farms out of business while their farmer is still alive. A deferred tax on death seems a good compromise.
None of this is to say that the suite of reforms as they stand are perfect or even good. Your point that the million pound threshold would simply encourage more investors to gobble up land that they sit on and just lease back to the farmer as a means of tax evasion is completely true and a gaping flaw in the rules. To me that seems a problem with the idea of the threshold, and the way it incentivises behaviour of everyone towards gaming with the exemption to abuse what was originally just put there as a compromise for very small farmers.
I think given the inherent exemptions, incentives and way in which land in general is used as a tax-advantaged investment for the wealthy, there's still a lot of flaws of design and inertia behind the current system that chokes off access to land to those who want it for productive purposes. But it does seem a step in the right direction, albeit, at the cost to the interest of farmers. Such is the nature of a zero sum game like land.
Non-farmer with a question. Couldn't you get around the inheritance tax by turning the farm into a limited interest company? Then couldn't you just change the shareholder and CEO and leave shares in the will without having to pay the inheritance tax? I'm assuming I'm missing something.
Good accountants and legal advice will help no end. IHT may be a good thing as it will force older farmers to move land to the next generation more quickly and this may bring new ideas and imagination back into the industry.
It was so disappointing to see that this budget addressed no loopholes.
This seems pretty tragic, because it dooms small farmers. But there's the same problem you pointed out before in other videos and in this one; your farm is not economically viable. The huge 5000 acre estate has money for this, yours don't. The whole idea of family farms are, again, not viable as a business. Is there not a way for you to incorporate a company that owns the land and thus doesn't personally pass as inheritance from person to person?
CGT rears it's ugly head as soon as you move the ownership of the land to the Ltd Co.
I would imagine that Labour thought that taxing land inheritance *was* the closure of the loophole that lets the rich buy up land to pass to their children and avoid the inheritance tax. Possibly reflective of the fact that so few of our political class have set foot on a farm for anything other than being the landlord or a photo op. Anyway, I would further imagine they will indeed walk it back, possibly by increasing the cap on land value or by trying to come up with some other measure that isn't quite so speculative. Eventually.
Tripe and being from Lancashire I know what tripe is.
Hello Oli. Love the channel. Would be interested to hear you talk about the government buying land from farmers, aka nationalizing farmland. I'm sure it would only lead to a socialist utopia and have no potential problems whatsoever.
You should be ok at the moment as if you also live on the land the limit doubles to £2million but that will probably change if the limit doesn't change each year in line with land prices. Personally I see the this new tax as a good thing for small holdings and those looking to become small holders.
Would this tax still apply if your Father converted your business to a C.I.C . A charitable service producing food for the local people around you.?
this applies to very few estates once all reliefs have been applied for, will be a large sum for even fewer and with proper tax planning an even smaller number.
a lot of nonsense has been spread about this. mostly out of poor communication from the government and unfortunately sometimes out of simple self-interested dishonesty.
That was the first thing I thought. They needed to target larger estates. Threshold needs to be way higher and some form of secured tenancies that survive land transfer.
Argument against USA food exports:- the rate per year of food poisoning in the USA from the CDC (20%) vs the rate from the UK FSA (2%), or from the WHO (10%).
We are all doomed. Great video.
You don’t have to explain the stupidity of this Communist policy to me.. But will the PPE graduates wrap their brilliant minds of the effect on food production here
great video! Kinda captures my general frustration with this political moment. These left (centre-right) remnants of former post war pro-labour parties across Europe are now so uninterested in talking to working class people that the Right can just pick up these simple & obvious policies and genuinely offer some sections of working class society better outcomes. They will figure this out about climate change too eventually. Plays right into their zero-sum world view
As a direcct result of this video, I have written to my MP about this. How effective this will be remains to be seen, as she is a city MP and I have no stake at all in the outcome, but this is absolute bullshit and has actually made me really fucking angry. I attached your video to the email. I hope you don't mind.
I was watching the budget live and thought of you as soon as I saw this part was annouced.
I know you said it could have been better had it been implemented on land size rather than land value.
Do you also think it may have worked had they somehow set it up so that only owner ocupiers were exempt? As a way of trying to prevent people like James Dyson from using the farmland exception as a way of protecting assets and thus pushing up the value of land.
Saying that, I think that the current implementation may have been worse than taxing inherited farmland at the same rate as other assets as it still gives the insentive for rich people to put their money in farmland, so making it difficult for new farmers to buy in. And also messes up current farmers when they pass their farm down.
Enjoyed this but yes very depressing that the politics you support has shown its true ethics regarding the 'working' class!
Cheap food cost the farmer's
Just quick point, you also have your mum and dad’s personal allowance of 1 million if they are married. So you may be ok. There are also suggestions if the farm is in both mum and dad’s name, they both get 1 million but not sure if that’s true. Take some financial advice as you may be ok.
That was a fair summary of this situation. At the heart of this budget was the chancellor’s will to fill the22 billion black hole the pm says he inherited form the previous government which it certainly has to take some credit for but let’s not forget the previous government to that when Gordon Brown sold 395 tons of the national gold at an average price of 275 dollars per troy ounce which is now worth more than ten times that and the process of quantitative easing none of the parties are are without blame but this budget plans to make farmers pay for someone else’s mistakes.What it will certainly do is to add to the mental health of the farmers concerned when they are burdened with this debt.I strongly believe this chancellor looked at the countryside with only £signs in her eyes and it would be fair justice if she at least should fall on her own sword
I think this is an example of how tax laws that were intended to help certain industries have been hijacked by the wealthy and how once again it's working people who pay the price.
For example, Clarkson initially bought his farm from/took advantage of a neighbour, that was forced to sell during the 2008 financial crash, so that he could avoid death duties.
And it galls me that a celebrity, on a multi million pound contract with amazon, can gain the sympathy of the British public when the success or failure of his farm has very little impact on him, whatsoever. This Farming Life is a much better program about real farmers, but no one watches it because it's not fronted by a gobshite who shills for billionaires.
Also, I would be very wary of Farage's support for farmers if he does the same to them as he did the fishing industry that he used and abandoned to get what he wanted.
Would someone like to explain why farmers shouldn't pay inheritance tax?
Because tax is theft.
@@Luke-xx1kn
Would you care to explain why anyone should? It’s already been taxed.
because despite farms being worth alot, they dont make much profit. And taxing businesses that is so important to everyones daily lives to the point where they have to close forever is completely unfair.
Its like the government going to the local chipshop on the highstreet and giving them a tax bill of a half million pounds so they have to sell their business.
Without this tax releif nobody in this country will be farmers and we will lose complete control over our food production
@leeboss373 if I had a pension pot from my wages, that's already been taxed, my wages are taxed. I go to fuel station and taxed again on fuel ?there's multiple layers of tax on everything
@
Yes, criminal isn’t it.
The farmers are now getting the same treatment that the aristocracy got in 1910s. Inheritance tax is a spiteful tax that punishes long term property right between generations. Add 2 brutal wars into the mix and you can see how the aristocracy was almost completely destroyed. Instead of thousands of families in those stately homes, many were destroyed or given to councils or charities that ironically pay zero tax at all. They are deliberately attempted to crush small farmer so the farms get sold off for housing land or consolidated into bigger farms owned by people like Bill Gates. Whilst also destroying the country communities. The government regime is pure evil trying to dispossess everyone.
Serfs move over lord Ali moves in, surprise, surprise!
"Farming is a way to live poor and die rich" Damn.... 😢
Olie
You need to get your Dad to transfer some of the land to you as a gift. If he lives 7 years after the transfer no IHT will be payable.
IF he lives 7 years. problem is also is that younger generstions have a high chance of divorce, so this means that older generstions might be a bit more hesistant to hand it over, and a lot of other reasons that means the older generation is hesistant to hand it down.
this isnt the case with most farms tho, but it is with a surprising ammount
@oogabooga2337
Even if Olies Dad lives less than 7 years a proportion of the tax that would otherwise be due would not be payable.
Further I think the farm house would attract a £325,000 (more likely £650,0000 if Oli's mother lived or lives in the home) exemption for being a dwelling house transferred to family to add to the one million that applies to agricultural property.
I doubt if a 120 acre farm ( at current prices) like Olies would, in reality, attract anything like the IHT Olie thinks and with a bit of planning would attract none at all.
@ a 120 acre farm would have a land value of roughly £1.2 million. A farmhouse value of possibly 500-700k, and likely one or two cottages roughly (200-300k) and then any farm buildings like barns, grainstores, cattle sheds could easily add another 300-400k possibly much more depending on their size
@oogabooga2337
The cottage on the farm is likely a relic of the days of live on farm workers. It might still escape IHT if it is occupied by a retired relative . The sale of the cottage to pay IHT would not reduce the viability of the farming part of the business.
11 000 an acre is likely an overvaluation for the land in question but the very best grade 1 arable land can get close to that price. Of course if the farm is adjoining an urban area there may be some speculative value in the land as potential building land. However if that matrialised Oli would be quids in. If Olis' parents are married they each old an exemption on the farmhouse and on the agricultural land which doubles the non taxable allowance.
Oli lives on a small farm which was a former dairy operation I doubt that there are massive grain stores I suspect there may have a bit of investment in converting the milking parlour and barn into a store to something we'll over 2 and half million
The fact is things are not as gloomy as Oli thinks though they might be if the farm was 500 or 10000 acres. I would be surprised if his farm attracts or leads to any Inheritance tax.
I did warn you when you said you voted Labour in a few videos back.
Now you and other hard working farmers will have to suffer.
If it was just you and those who were stupid enough to vote for them that suffered, I wouldn’t worry.
But as we’ve seen there are sadly some farmers who have taken their lives because of this and the party you helped put in power.
So be careful what you wish for and I hope you will learn a valuable lesson out of this S show.
Not really. It's not as if labour have ever done something like this before, nor was such an idea floated by the party leading up to the election.
The idea of higher taxes and a freeze on subsidies was fairly accepted. This policy is genuinely out of the blue, and unexpected as it is devastating.
Just as thatcher had very little to lose politically from dismantling mining communities in the 80s- so it is the case tha labour have little to lose by attacking farmers. This is because pretty much to a man, theyve voted Conservative consistently for the last 50 years. Im not defending the policy. Im just pointing out that in some room, somewhere- someone definitely said 'but this may destroy farming communities'- 'yes well, none of them voted for us anyway'.
Its a sad outcome of the system, one could say- but if all these non-parasitic working class workers who favour the post-war settlement ever actually voted for the party who delivered it instead of brexitory - then the Labour party would have an interest in defending them.
just to reinforce your point on the potential impact on tenants,both two of grandfathers had their farms sold from under them in the 1930s,following death of the landlord.The land went on the open market,tenants rights were weak,they couldn't buy the farm,end of the business.
As i understand it, the crown estates pay all their income directly to the state, the king gets nothing
The Guardian wrote up a big investigation on this last year - its all on their website under "Cost of the Crown". The duchies of Cornwall and Lancaster (~71,000ha or ~175,000 acres) are considered private property of the monarch and so they keep all the revenue, which is ~£42m/year, with no corporation or capital gains tax. That's in addition to the £86m/year sovereign grant paid by the government from the public purse to maintain the royal family.
The duchies are also exempt from some renting regulations and the duchy of Lancaster even claims the estates of its tenants who die without a will or next of kin.
@@waelisc Thanks for the info. How much does the state get from the crown estates?
@malkomalkavian from another Guardian article of last year, apparently £312m/year, though as the crown estate also "owns the seabed and half of the foreshore around large parts of England, Wales and Northern Ireland", it's set to generate ~£9b over the next decade from selling rights for offshore wind and oil/gas drilling.
Subsidies have to end for farming because they have increased property values to the level that it’s made farming uneconomic. If Australia and New Zealand can have an efficient, unsubsidised agricultural sector that exports substantially while having vagaries of weather and distances unheard of in Europe, then British farmers should at least be able to get by without burdening the taxpayer.
If the land is worth £2 million, and you are generating an income of £7000/year, why are you doing this? My suggestion is to close down the farm, sell the land, and put the £2 million into a tracker fund which would generate dividend income of around £60,000/year, with the capital growing with inflation at least over the long term. And you would also be free to spend time working on another farm that you don't own, and perhaps generate some income as an employee of another farmer.
10:05 "We don't parasitically live off rent - we produce stuff". That's true, but the value of what you produce is only £7000/year. In order to increase the value of what you produce (food) you need to reduce the supply of it (supply vs demand) either by restricting cheap food imports (which might be a good idea from a national security perspective), or closing down some of the UK farms.
The farmers I know farm because they have a passion for farming. Not everyone works purely for money.
@@TheWoodlandOrchard I'm sure that is true. Another possible solution to the problem might be to require farmland to be used for farming, with penalties for non compliance. This might reduce the value of farmland because that would be a disincentive for other potential users and uses. This might reduce the value of the land to below the inheritance tax threshold, meaning no inheritance tax would be payable.
@@aerialexplorer772 Something along those lines, yes.
I accept targeting the assets of the very wealthy (I watch 'Garys Economics') but this budget doesn't do that. I think it's going to put more land into the hands of the corporations, taking it out of the hands of those who want to farm it.
Farmland values should reflect its value for farming, not wealth protection. If the government worked for the people, it would be working to help create more small, viable farms on the basis that this diversity of production increases resilience in the system. That's true of any industry actually.
Renting out 100 acres should bring in £20000 per year.
Take the red pill.
Who are you to tell someone that 1000 acres is more than one needs? Man the UK sucks. Taxation is theft.
unfortunately 1000 acres is what you need now to make a decent profit on a farm
With a 1000 acres you are definitely making decent money. And likely to outright own equipment. This makes even debt cheaper.
@@tisFrancesfault yeah and 1000 acres is a huge ammount. Uk average farm size is about 200-400 acres depending on the county
@@oogabooga2337 the only time is not is those that own such acreage in moorland etc where the productivity is rubbish. A sheep farm in noth Wales with a 1000 acres is not making notable sums of cash.
That said their land may be worth a few bob
@@tisFrancesfault i know, theres huge patches of land in scotland of thousanfs of acres which is compartivley super cheap cuz u cant grow anything on it
This tax wouldn't work in Australia because our small farm is worth 2 million, 1000 acres just survivable, we avg 5t/ha crops but other big farms worth 10m might produce half that 2t/ha. My farming started 2000 today i seen 2 wet years, 7 years of drought n rest below avg, no way i could pay avg tax.
If you have 2 million dairy farm, how could you afford to invest in new dairy shed, buy investing in new shed it helps you n economy. Also you have to upgrade to keep up in regulations, safety laws. All these rules, laws n financial decisions n wonder why we farmers struggle to stay afloat?
Being ignorant of your family situation and trying not to be crass while agreeing from afar this sounds like a horrendous policy, but…if your father is still in middle age and likely has a few decades left…is there any way you could come up 200,000 over that time from outside the farm?
Not ideal I know but instead of outright inheriting the farm you would at least get to buy it for ten percent of the value. I had to buy mine from my parents here in America for about a third of the value, then install drainage and obtain equipment. I hope you can find a way.
First that 200k would also be taxed (and potentially at 40% as it could/likely would be seen as outside the agri relief). And as far as I can see atm I, or my siblings/cousins or Oli (guy in vid) would have to obtain like a 2 million pound mortgage... Bad enough but image the rates when you say you're at best make 30k per annum? Plus image the extra cost of say needing to buy a second hand 60k tractor, in that 30 year period?
@@tisFrancesfaultI don’t have to imagine. I face the same situation in America where we have expensive land, taxes and idiotic politicians too. I’m also from a poor family. I’m not that smart (Oli is smart) and I’m kind of lazy but somehow I’ve held on to the family land.
Why would he have to get a two million pound mortgage when he’s going to inherit the buildings, machinery and land? He just said his estimated tax on all that would be 200,000 upon inheritance. What I’m suggesting is he come up with that money on his own, now, in the decades he has before he inherits. If he can save and invest ten percent of what he makes at a job away from the farm, one would be surprised what that could be in a couple decades. It’s not going to be fun. It’s going to downright suck at times when your friends go on holiday but it can be done. It would be better if it wasn’t necessary but I want farmers everywhere to be able to keep their land so I’m trying to offer a modest suggestion.
@@aaronswanson6719 Well if hes to buy the farm, he'd need to buy it in full (selling cheap is not allowed iirc as its seen as tax evasion (and you may have to contend with capital gains taxes) Then the parent would likely be taxed at a the full 40% of the sale which is an extra loss).
Thus like 2 mil. Hes from iirc the upper midlands and the modal average income is like 20-something k. the UK median is like 34-36k or so. So in Olis case, he'd A) have to buy outright at 2 mill or save anywhere from 100pc to like 60ish pc so of his income so he has enough to pay the 200k upfront. assuming fates willing his farther lives a decade more.
this would leave him destitute during the best years of his life and no better off for it.
Its literally paying a 5th of a million for the privilege to earn 10-30 grand.
If my brother saved 10k a year for the next 20 years he'd have enough. but again destitute. and then would be a decade from retirement age... So my nephew would then have to have 200k in todays money by his 3rd decade. Again, its insane. Again, we're fucked. it is over.
@@tisFrancesfault well if it’s that bad, I guess you best figure out what chunk of the farm you want to sell off, rent the rest to a larger operator and find another way to make a living and enjoy life. It happens here all the time and no one cares if another small farmer leaves the scene. Since Oli only appears to be in his early 20’s, I assumed his dad would be mid 50’s and have 2-3 more decades before the inheritance came during which time Oli would have to make a living off the farm anyway.
I hope you guys can get your government to reconsider their plans. I do think it’s horrendous.
The farm won't be hit by a big inheritance tax bill at current land prices. (10 to 11000 per acre) Oli's farm is only 120 acres.
The farmhouse would be not be caught because dwelling houses have an 325,000 exemption attached to them. An exemption that is doubled if was occupied by a married couple. Oli does not appear to have too much expensive machinery and the outbuildings on a 120 acre farm are likely to be modest. If Olis' family remain worried about inheritance tax they could transfer some of the assets to Oli now. Perhaps the paddock that has the Bakewell sheep and a shed for lambing.
I'm so glad the US doesn't tax estates under $13m if single or $26m if married.
Thanks for the video
I always buy British produce but I wish farmers would not put up Buy British signs when they do not themselves e.g. driving an Audi
i alway look the way folk present their argument
it very telling when sone infer thyre always right and have that beady eye stare
"A married couple owning a farm together can split it in two, meaning it qualifies for £2m of agricultural property relief, plus another £500,000 for each partner if a property is involved."
So in reality most farms will have 3 million in relief.
But wouldn’t that mean that couple would have to die together at the same time?
@@leeboss373 No, as far as I am aware. It should acted like inheritance tax for a normal (married) couple where you can either give the share to the child when the first parent dies up to the threshold tax free or the widower inherits the relief for when they die. At least this is what I have read and what my family accountant has told us
@@harriershadow5880
I see
@@harriershadow5880
I know my mates dad has signed over his property to his 3 kids. Not sure on the details, I think you can do that to avoid paying inheritance tax 7 years before they die.
@@harriershadow5880
I see, thanks.
(Was removed)
The Duke of Westminster and King Charles didn't pay any Inheritance Tax.
I'm wondering if a Georgist land value tax might be necessary to bring down the excessive land prices/rents - it's particularly acute in an urban setting where a substantial part of a property's cost is the land value versus the capital investment (i.e. things you build on the land), and without the tax on land value, someone can make money from land speculation over the long-term (since demand for land goes up and supply is static)
Rural land is overvalued because of the urban demand - because farmers aren't making money, farmers need tax relief, or at least some way of being taxed that doesn't kill the proverbial goose. Small-hold farmers don't leech, they produce!
Ya, I was thinking he is explaining George's thesis on land and poverty to a T as he is living it.
But being caught in the middle of the transition would be a deathblow, so you'd need something like a 5 year moratorium on some uses to give prices time to adjust.
It also calls into question corporate ownership as there is never an estate tax levied on them so on a long enough timeline, they own all the land.
As the title card suggests, its over.
This measure is devastating. Like I defend death duties of liquid assets etc too. Though I always maintained there needs to be better rules. Principally duty should be paid on the sale of a family home or farm land, not an inherent tax on the transfer. ( I often propose the idea that a cleaner buying a slum house in london a century ago, at near nothing, shouldnt be penalised that that home, of for examples sake, a family of low income cleaners to this days, home is worth a million quid; unless sold. if ten years later you sell the property then sure pay the duty. but the inherent duty, only forces out the poorest simply due to circumstances they have no control over.
The only thing I see happening is that the family farm of about 100 acres or so (i do forget) and much like your own very modest is proportionately hardest hit) will need to be sold off to the bigger, wealthier, neighbouring farms.
All I see is the reintroduction of aristocratic land owners.
Right now, im exactly like yourself regarding the Labour party. Im not a member, but I did defend labour leading up to the election, that tough choices are likely. But this is not a tough choice, this is small holdings having their throats slit as sacrificial bulls. And as far as I can see it only enriches wealthily landowners.
And I especially pity the farms in the south east, near London, where inherent land value is horrendous - regardless that its disconnected from agricultural value.
I fear this is a horrendous take, where the labour party is pandering to the worst elements of right and left wing elements. its a pain in the arse for the wealthiest land owners, but tolerable, yet seen as screwing "bastard (smaller) landowning farms" panders to the the urban left.
Im optimist in that a farm can earn on a 100 acres total, 30k a year, if hard worked and optimised ( crop some beef and hedge cutting (which not everyone can do). but having to take a 200k loan/mortgage JUST TO PAY DUTY, is in no way feasible for the next generation.
We are fucked.
"Proportionally the hardest hit"
What nonsense. Ollie' farm won't be paying much or any Inheritance tax. 1 million allowance for agricultural land, the farm house will attract a 325,000 allowance. The allowance would be doubled if the farmhouse is or was occupied by Ollie's parents. The family could, if necessary, transfer land to Ollie before their death etc etc
Agree the issue is having a different threshold for IHT for a specific asset class is causing a lot of the issues and that with their new scheme still allowing a significant tax benefit they'll have the worse of both worlds. Farmland values are in a bubble created by all the entrance of unconnected people seeking tax relief and this change might break up the largest estates but 1m tax free and 20% on the rest will still be rational choice for many. A cynic might look at exactly who labour is focused on and wonder if they aren't aware that the main beneficiaries of this would be people who have generated large paper profits in housing and income. They would find the outcomes of a £1m soft cap very appealing, enough to be worth doing but not enough that they're not getting outbid by people hoovering up large estates. Upper middle class London retirees looking to sell their home worth a couple million and move out of the city can trade it in for a house on the coast and a small farm to rent out and not have any IHT.
Your grandfather's/father business being worth £2m on paper but generates £7k in profit annually is a byproduct of that. Your solution of capping it based on the land requirements of an average farm would face the same issue- if farming can continue to be used as a loophole to avoid IHT then the value of farming assets will continue to be detached from the reality its ability to generate value. If farming land attracted the same IHT as any other business then the next generation could take on the business without being outbid by an investor class. Attach a specific capital gains tax on changing land classification to avoid long term land speculation and the £7k net profit (£58 per acre) business would be valued accurately. Of course you'll still have to deal with the existing housing being unaffordable (assume that was included in the £2m valuation) but that's a different problem.
Politicians ability to screw this up is truly limitless.
No mention of the 7 year rule?
Labour Party, stop wasting the country's peoples money
In Britains neighbours (Ireland, France, Holland, Belgium, Noway ) the farms are much smaller, and there is a critical mass of mostly Peasant farmers. There are fewer estates. It is good to know that this eventually changed in Britain ( though Scotland is a complete exception as the peasantry got nothing).
Regardless of their differences, they stick alongside another when dealing with ugly actors...sorry...I meant politicians....mmmmm.... Plus the families of these farmers. You get a serious opposition in these countries.
Couldn't you move the farm into a company and simply change the owner of that company?
Not watched the whole video yet so may be a useless comment but could you get round this by buying the farm from your dad for like a quid or something when he’s ready to pass it on?
My mates dad has signed over his property to his 3 kids. Not sure on the details, I think you can do that to avoid paying inheritance tax 7 years before you die.
No, iirc that long been considered tax evasion and is a crime. (I may be wrong but Im sure thats been the case for a while now).
@@leeboss373 not at all the case. Taxes suck, even for those that support taxes.
but this isnt just more taxation on farmers (not new to farmers), however this is pure FU energy. Like I said I defend the idea of designated family property immune from taxation. Because it can be just in many situations.