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Multi-Million/Billionaires Owning Farms
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I used to wonder why so many super-wealthy individuals (such as James Dyson) and a number of rock/pop stars/celebrities developed an interest in farming (in the UK) once they had loads of cash to spare.
For instance, Dyson owns around 36,000 acres of farmland, reportedly worth over half a billion pounds. I wonder how often he travels from Singapore to oversee this operation, given his interest in being a farmer.
I was unaware that the reason these super-rich individuals invest in farms; is that there is zero inheritance tax on the investment – even a 20% tax rate over £1 million still looks an attractive option – but not to farmers.
Watch Clarkson berate the BBC (Victoria Derbyshire) for suggesting he purchased his farm to avoid inheritance tax (classic BBC, as Clarkson points out).
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Clarkson knows why he did it but he also knows that most of the farmers are custodians of the farm passed through the family for generations. He knows when he dies his estate can sell up and pay the IHT and still have lots to spare, whereas the farmers he campaigns for can't sell off livestock or land to pay an IHT bill.
The intended changes will result in more farms being bought up by billionaires and conglomerates from farmers estates that have to sell up to pay the IHT.
By all means clamp down on the IHT loophole for the multi millionaires and billionaires.... but don't ruin uk's farming industry by also hitting traditional family owned farms that have been passed on through generations. Maybe make the threshold £10 million or apply IHT only to large farms purchased in the last 10 years or something like that.
But some would rather throw the baby out with the bathwater by ruining traditional uk farming simply because of jealousy about a few rich entrepreneurs. The money this raises in insignificant compared to what they hand out to train drivers and to overseas climate change projects.
Based on Dyson’s farm holding and value – it would require around 70 acres of farm-land to be worth around £1million (for those not familiar with acres, 70 is an area approx 600 yards by 600 yards) – that’s quite a sizable area of land to own before paying any inheritance tax.
We should stop feeling sorry for wealthy farmers; someone has to pay for the dire state of the NHS that the Tories allowed to fail over the last 14 years – better the wealthy pick up the tab, rather than the poor in society.
Massive fail there Hymie as Clarkson has never hidden his motives behind buying farmland. Yes of course rich people have taken advantage of the zero IHT rate(and personally I feel everybody has a responsibility to use all legal means possible to pay as little tax as possible), but you're wilfully missing the point about this insidious tax. It is likely that a large number of farms will have to be sold, farms that may have been farmed by the same family for generations, in order to pay the inheritance tax. They may even be sold to the Dysons of the world. Somebody inheriting a farm with the intention to continue farming the land isn't gaining a windfall cash benefit from the inheritance so it is daft to punish them with a big tax bill.
This shambles Govt full of liars, incompetents, chancers and idiots is an absolute disgrace - the only silver-lining is 100% they are a one-term Govt.
A few years ago (in a sad tale) a young relative of a work colleague died. He was single, buying a flat in central London. Despite being single, he had insurance on his mortgage which was paid off as a result of his death.
But the value of the flat significantly exceeded the zero IHT threshold, such that his family had to sell the flat to pay the IHT.
Why should farmers be exempted from IHT, when the family above had to pay it at a 40% rate?
As is usually the case with this government the problem they purport to be addressing will in fact be made worse. When the small farmers are forced to sell who will be the buyers? Yep it's the Clarksonites!
THE WONKY WORLD OF FARM ECONOMICS
Most people know nothing about economics of farming – having only stepped on a farm perhaps to use a footpath. Most voters live in metropolitan areas, as do their MPs.
Nearly 50% of farms make under £25k p.a. and about 1/3 of those make no money at all. In order to make a decent living you need scale – all the profitable farms are big. The average size of a farm in the UK is 217 acres, but the generally accepted minimum threshold for viability is 500 acres.
The problem is that, with values at about £10k to £11k per acre, that means your just-about-viable farm will be worth at least £5m. Without planning (which is not always possible) this means an IHT liability of £4m x 20%, that is £800k. Bear in mind that a 500 acre farm will only make £50k to £90k p.a., you can see that such a huge liability would be impossible to finance without selling land. However, if you sell land then you make your farm unviable.
Incidentally, the average farm (not farmer) makes about £96k p.a. Your average farmer takes a salary of about £25k p.a., way less than half the average train driver’s pay. These people are not rich – they work hard for very little reward.
It seems that metropolitan policy makers have in their mind a privileged elite of farmers, but the IHT policy will end up hurting the average, hard working and hard-up, farming community.
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