Bye bye Starmer

User avatar
GG.
Posts: 5283
Joined: Wed Apr 11, 2018 4:16 pm

Re: Bye bye Starmer

Post by GG. »

Yes. Anti avoidance measures are not the same as what they've done here... which is just to reverse a beneficial exemption aimed at supporting the farming industry and stopping farms being split up. The de minimis threshold they've proposed will not be sufficient for the value of a farmstead plus value of farming business in many cases.

You could also propose that if the farm/business is sold within 5/10 years post being inherited then it is taxable. That would be pretty effective. If the descendents of said millionaires have to just sit on it then really it is just supporting a farming business not a store of wealth.

Obviously they're not really interested in doing the "right thing" by people, just whatever (a) raises money to allow them to splurge or (b) doesn't raise any money but hits the people they ideologically don't like (VAT on school fees) under the guise of "fairness".
User avatar
ZedLeg
Posts: 7624
Joined: Wed Apr 11, 2018 4:19 pm

Re: Bye bye Starmer

Post by ZedLeg »

Simon wrote: Thu Oct 31, 2024 7:22 pm There are other tax loopholes they've been investigated and retroactively voided by HMRC over the years. No-IHT on farm estates is not such a loophole.

And taxing farm estates very much is labours fault. Who else's fault is it? It's their (non manifesto) budgetary policy!

I would've personally put employee NI back up to 10%. I know they said they wouldn't in the election but the lowering to 8% by the Tories was clearly a trap, and we could I'll afford it. I would also have pushed fuel duty by CPI as well, but as I said elsewhere that itself would've been inflationary. Altogether would've netted more tax than clobering a few farmers.
Again, I’m not saying no iht on farming land is a loophole. That anyone with a big pile of money can buy a farm and take advantage of it is.

Duncs seems to understand what I’m saying.
An absolute unit
User avatar
Jobbo
Posts: 11054
Joined: Wed Apr 11, 2018 4:20 pm
Currently Driving: Gentle hands

Re: Bye bye Starmer

Post by Jobbo »

ZedLeg wrote: Fri Nov 01, 2024 4:11 am
Simon wrote: Thu Oct 31, 2024 7:22 pm There are other tax loopholes they've been investigated and retroactively voided by HMRC over the years. No-IHT on farm estates is not such a loophole.

And taxing farm estates very much is labours fault. Who else's fault is it? It's their (non manifesto) budgetary policy!

I would've personally put employee NI back up to 10%. I know they said they wouldn't in the election but the lowering to 8% by the Tories was clearly a trap, and we could I'll afford it. I would also have pushed fuel duty by CPI as well, but as I said elsewhere that itself would've been inflationary. Altogether would've netted more tax than clobering a few farmers.
Again, I’m not saying no iht on farming land is a loophole. That anyone with a big pile of money can buy a farm and take advantage of it is.

Duncs seems to understand what I’m saying.
It was a loophole - it was widely known and used as an IHT dodge, as Clarkson stated publicly.

The rules can be changed but since the whole point is for families to protect the older generations’ wealth, Duncs’ suggestion wouldn’t really work; chances are somebody buying a farm at 50 will live until 80+ anyway and they had to make sure the farm qualifies as a farm to benefit. That’s the loophole.
User avatar
mik
Posts: 13435
Joined: Wed Apr 11, 2018 6:15 pm

Re: Bye bye Starmer

Post by mik »

Possibly of interest

User avatar
Simon
Posts: 5220
Joined: Wed Apr 11, 2018 4:03 pm

Re: Bye bye Starmer

Post by Simon »

But again, he mentions that idea that you just 'gift the farm' 7 years before dying. That doesn't work, particularly with a farmhouse. It would be a gift with reservation. Your heirs are then double stuffed because ithe gift is disregarded for IHT purposes, but then in scope for capital gains tax too, leaving a potentially huge bill. This is the same misinformation doing the rounds on the internet as "no not=no insurance".
The artist formerly known as _Who_
User avatar
Gavster
Posts: 3485
Joined: Mon Jul 26, 2021 11:31 am
Currently Driving: A washing machine with heated seats

Re: Bye bye Starmer

Post by Gavster »

I always find the idea of gifting 7 years before dying a weird concept because a) we don't know when we're going to die and b) people have to acknowledge they might die soon which goes against most people's mindset.
User avatar
Simon
Posts: 5220
Joined: Wed Apr 11, 2018 4:03 pm

Re: Bye bye Starmer

Post by Simon »

Plus the residence nil band is tapered for an estate worth more than £2m. The relief drops by £1 for every £2 in excess of£2m. One wonders whether agriculture relief will take this up to £3m before the taper or not.

But just fyi by £2.7m there is no RNRB, so you are paying IHT on anything over £650k for estates over £2.7m.
The artist formerly known as _Who_
User avatar
dan
Posts: 696
Joined: Wed Apr 11, 2018 11:22 pm

Re: Bye bye Starmer

Post by dan »

mik wrote: Fri Nov 01, 2024 7:18 am Possibly of interest

Definitely relevant to all the farmers with >£2m estates on this forum for sure.
User avatar
Simon
Posts: 5220
Joined: Wed Apr 11, 2018 4:03 pm

Re: Bye bye Starmer

Post by Simon »

Gavster wrote: Fri Nov 01, 2024 10:15 am I always find the idea of gifting 7 years before dying a weird concept because a) we don't know when we're going to die and b) people have to acknowledge they might die soon which goes against most people's mindset.
Donate early and often.

You can also give £3k a year per person and also unlimited funds FROM INCOME assuming it doesn't affect your lifestyle.
The artist formerly known as _Who_
User avatar
Gavster
Posts: 3485
Joined: Mon Jul 26, 2021 11:31 am
Currently Driving: A washing machine with heated seats

Re: Bye bye Starmer

Post by Gavster »

I was referring to the idea of giving away a large piece of agricultural land, because it's a large amount and must seem... somewhat final for the person giving away.
User avatar
Mito Man
Posts: 11236
Joined: Wed Apr 11, 2018 4:27 pm

Re: Bye bye Starmer

Post by Mito Man »

There's a chap on King's Road who runs one of those stores selling various rocks and incense. You pay him £40 and he'll tell you all about your future. Reckon there's a queue of farmers there now.

I think the most realistic option for those at short notice is to just sell a bit of derelict farmland which has an old structure on it. Farmer next door wanted a new telehandler and tractor. Sold off his derelict asbestos barn which was falling apart in a flood zone, with 2 acres surrounding which he used as a dumping ground for £375,000.
How about not having a sig at all?
User avatar
GG.
Posts: 5283
Joined: Wed Apr 11, 2018 4:16 pm

Re: Bye bye Starmer

Post by GG. »

mik wrote: Fri Nov 01, 2024 7:18 am Possibly of interest

I did read this. Breaks down into three categories (as below) but overall is a justification of tax policy for a party in respect of which he is a tax advisor for their national ruling body. So again, these posts should all have a big health warning on them but don't.

1. Good and helpful factual commentary. Some of it about thresholds and the fact that you can add the exemption for property on top are helpful explanation.

2. Partially good but implies he has more knowledge than he likely does. There's a second bucket about farm valuations that he has some secondary knowledge of by virtue of parliamentary submissions and the banding tables (which he uses to infer that values will generally be low) and adds again some helpful explanation that values are assessable not on the basis of development cost. He then goes on to say farm with revenue of x wouldn't be valued as much as y. He will have fuck all idea about this to be honest and it is an absolutely massive oversimplification. As you've seen from Harry's videos, the fluctuating revenues of a farm can mean that one year you could be in a loss making position (and not have extra to "finance" tax, as per 3 below) and then years which are better. There are also many different types of farms and a short period post death to have these valued and pay said tax before you then start attracting penal interest from the revenue.

3. Bad and frankly quite glib and justificatory (see health warning above). The "tax planning" stuff. As Simon mentions... Some of it wrong, some of it impractical, some of it leaving out material facts.
  • Get insurance. Well - that works if you neatly plan when you're going to die and what the tax liability will be at that point. Clearly you can't and you can't get life insurance to 90 years old. Even if you could and die at 91 you contingency planning has failed entirely. If the tax rates go up you're left with a shortfall. If the value of the farm goes up you're left with a shortfall. You also have to pay for this and if you are 60 now and suddenly for the first time since 2015 it is a salient issue then you'll be too old to easily get cover. Plus life insurance, you know, might be for other things - not just avoiding a tax grab via IHT - hence why its not called IHT cover.
  • Pass it to your kids. Doesn't work. If you still plan on living in the farmhouse my understanding is you'd have to pay your kids a commercial rate of rent otherwise will be seen as avoidance. Presumably the same for working the land - you'd have to pay as a tenant farmer would.
  • Farms "financing up the tax". I find this the most objectionable in some ways - the idea that businesses are going to have to go into debt to finance tax is an awful idea.
As someone noted - either he's right and this won't affect many people anyway, in which case don't do it. Or he's wrong and it will in which case don't do it.

Also Dan and Rich's snide comments are getting a bit tiresome. No this is not a farming forum so there won't be many on here but they're doing the same thing to shares in small businesses (and my family has a family business), so this sort of shithousery on tax will affect most of us at some point. It already affects all employed people by virtue of employers class 1 NICs despite them lying about this. The fact that it is not an immediate deduction but robs people of pay rises (or potentially, their job or opportunity for a job) does not make it any better.
User avatar
Simon
Posts: 5220
Joined: Wed Apr 11, 2018 4:03 pm

Re: Bye bye Starmer

Post by Simon »

GG is correct.

Labour should've been up front and said 'sorry, we need more money to fix stuff' and reversed the 2p NI cut, which would've raised £10b. They (correctly) raised the minimum wage so low earners would've been shielded from this a fair bit. Add in raising fuel duty and you suddenly have a lot more revenue than this I'll thought out policy.
The artist formerly known as _Who_
User avatar
Holley
Posts: 336
Joined: Thu Apr 12, 2018 1:21 pm

Re: Bye bye Starmer

Post by Holley »

GG. wrote: Fri Nov 01, 2024 10:38 am
mik wrote: Fri Nov 01, 2024 7:18 am Possibly of interest

I did read this. Breaks down into three categories (as below) but overall is a justification of tax policy for a party in respect of which he is a tax advisor for their national ruling body. So again, these posts should all have a big health warning on them but don't.



3. Bad and frankly quite glib and justificatory (see health warning above). The "tax planning" stuff. As Simon mentions... Some of it wrong, some of it impractical, some of it leaving out material facts.
  • Get insurance. Well - that works if you neatly plan when you're going to die and what the tax liability will be at that point. Clearly you can't and you can't get life insurance to 90 years old. Even if you could and die at 91 you contingency planning has failed entirely. If the tax rates go up you're left with a shortfall. If the value of the farm goes up you're left with a shortfall. You also have to pay for this and if you are 60 now and suddenly for the first time since 2015 it is a salient issue then you'll be too old to easily get cover. Plus life insurance, you know, might be for other things - not just avoiding a tax grab via IHT - hence why its not called IHT cover.
Most insurers offer term plans to age 90. There are also whole of life options which can be done on a 'second death' basis on joint plans for the purpose of IHT planning. Insurers like Royal London actively advertise WOL for IHT planning and have IHT calculators on their website https://adviser.royallondon.com/tools-c ... alculator/

It is pricey though (although cheaper than paying the IHT) and agree the cost of IHT will likely increase (insurers do offer an increasing option to combat this).
User avatar
GG.
Posts: 5283
Joined: Wed Apr 11, 2018 4:16 pm

Re: Bye bye Starmer

Post by GG. »

Is the increasing option just inflation linking I presume. It wouldn't step up in line with the underlying liability right? And again if you happen to die after the policy expires you have no contingency at all.

I also assume getting a policy to 90 if you're currently 63 on, say £500,000 of IHT would indeed be significant amounts pcm but you would know better than me on that.
User avatar
Jobbo
Posts: 11054
Joined: Wed Apr 11, 2018 4:20 pm
Currently Driving: Gentle hands

Re: Bye bye Starmer

Post by Jobbo »

Simon wrote: Fri Nov 01, 2024 10:08 am But again, he mentions that idea that you just 'gift the farm' 7 years before dying. That doesn't work, particularly with a farmhouse. It would be a gift with reservation. Your heirs are then double stuffed because ithe gift is disregarded for IHT purposes, but then in scope for capital gains tax too, leaving a potentially huge bill. This is the same misinformation doing the rounds on the internet as "no not=no insurance".
Gifts of houses to your kids where you keep living in them would indeed be caught by that. A gift of a farm, which is a business that happens to have a house on it, is almost certainly going to be effective; it is a transfer of the business to the next generation. Just because the father and son/s all work on the farm does not make it a gift with reservation. This is the sort of thing farming families don't do because the farmer wants to keep control, but that just fucks things up for the future in other ways. I was involved in a probate for a farmer with no will who had 3 sons who lived and worked on the farm, 2 daughters who didn't and a wife who survived him - it went on way over 10 years, the widow moved to Devon and ceased contact with most of the kids because fortunately she had family money to pay for a new house for her and eventually the only way the whole thing was settled without the farm having to be sold or split up was because there were some old barns which became ripe for conversion and the daughters got their value out by splitting those out - still with deferred payments to all kids. And that was one which didn't go to court - plenty of fascinating legal reports about farms such as the Guest case: https://www.thescottishfarmer.co.uk/new ... mily-case/

Anyway, actual farmers tend to stick their heads in the sand while well-advised wealthy people like Clarkson have bought up farms as IHT shelters. I don't think it is philosophically wrong to bring them within the scope of IHT.
User avatar
GG.
Posts: 5283
Joined: Wed Apr 11, 2018 4:16 pm

Re: Bye bye Starmer

Post by GG. »

The transfer would still attract stamp duty though presumably?

For a farmhouse worth £1,500,000 that's going to be well into six figures.

Re the IHT shelter thing that's easily addressed with saying you need to work it and not a tenant farmer and live in the farmhouse. That would still rule out clarkson as he lives in a big mansion he's constructed nearby.
Last edited by GG. on Fri Nov 01, 2024 11:43 am, edited 1 time in total.
User avatar
duncs500
Posts: 5242
Joined: Wed Apr 11, 2018 8:59 pm

Re: Bye bye Starmer

Post by duncs500 »

Jobbo wrote: Fri Nov 01, 2024 6:13 am
ZedLeg wrote: Fri Nov 01, 2024 4:11 am
Simon wrote: Thu Oct 31, 2024 7:22 pm There are other tax loopholes they've been investigated and retroactively voided by HMRC over the years. No-IHT on farm estates is not such a loophole.

And taxing farm estates very much is labours fault. Who else's fault is it? It's their (non manifesto) budgetary policy!

I would've personally put employee NI back up to 10%. I know they said they wouldn't in the election but the lowering to 8% by the Tories was clearly a trap, and we could I'll afford it. I would also have pushed fuel duty by CPI as well, but as I said elsewhere that itself would've been inflationary. Altogether would've netted more tax than clobering a few farmers.
Again, I’m not saying no iht on farming land is a loophole. That anyone with a big pile of money can buy a farm and take advantage of it is.

Duncs seems to understand what I’m saying.
It was a loophole - it was widely known and used as an IHT dodge, as Clarkson stated publicly.

The rules can be changed but since the whole point is for families to protect the older generations’ wealth, Duncs’ suggestion wouldn’t really work; chances are somebody buying a farm at 50 will live until 80+ anyway and they had to make sure the farm qualifies as a farm to benefit. That’s the loophole.
I'm certainly not going to argue with you, hence I caveated with 'or something'. I don't think the farm purchase loophole is a very healthy one for the farming industry, and so another mechanism that prevents that as an option would be a useful one to apply. All I'm saying is that it should be pretty clear who's attempting to manipulate the loophole, perhaps Clarkson is the exception as he got into farming but I'd hazard mostpeople buying a farm at 50 after making their money in finance are unlikely to have suddenly cultivated a generational family passion for farming.

That's not to say I agree with IHT as a concept or not, I'd be quite happy for it not to exist, but if it does I'd prefer it was applied normally and not meaning people exploit such a convoluted loophole.
User avatar
Holley
Posts: 336
Joined: Thu Apr 12, 2018 1:21 pm

Re: Bye bye Starmer

Post by Holley »

GG. wrote: Fri Nov 01, 2024 11:29 am Is the increasing option just inflation linking I presume. It wouldn't step up in line with the underlying liability right? And again if you happen to die after the policy expires you have no contingency at all.

I also assume getting a policy to 90 if you're currently 63 on, say £500,000 of IHT would indeed be significant amounts pcm but you would know better than me on that.
They offer RPI or fixed annual increases of 2-5%. On top of that they can offer GIO (guaranteed insurability option) which allows the client to increase the cover in the future without further medical evidence. They only offer the latter if the client is deemed a good risk from the outset.

£500k as a single life to age 90 would be pricey, £400pcm. A WOL joint life second death at 63yrs old would be £620pcm. That last one sounds horrendous but even if both lived to age 93, you're still £276,800 up. It's one of those that pays to do it early where it's significantly cheaper.
User avatar
Jobbo
Posts: 11054
Joined: Wed Apr 11, 2018 4:20 pm
Currently Driving: Gentle hands

Re: Bye bye Starmer

Post by Jobbo »

GG. wrote: Fri Nov 01, 2024 11:41 am The transfer would still attract stamp duty though presumably?

For a farmhouse worth £1,500,000 that's going to be well into six figures.

Re the IHT shelter thing that's easily addressed with saying you need to work it and not a tenant farmer and live in the farmhouse. That would still rule out clarkson as he lives in a big mansion he's constructed nearby.
Plenty of actual farmers have tenancies of other farm land (as Harry Metcalfe does); I don't see why the owner of that farm land which is being worked shouldn't get the IHT exemption. So if the loophole had been closed as you propose then it would have still caused a similar outcry.

No SDLT on a a gift; that would not be the case on a transfer for nil consideration into a company you (solely or jointly) own though, so putting the farm business into a company maybe isn't the solution. Transfer to the kids wouldn't have a big one-off liability though.
Post Reply