The Protest Thread.

[Simon]

So we're agreed? Just abolish IHT and all this goes away.

The problem is that farmers' farmland isn't really an asset worth £££ if it's being used to put turn a meagre wage - when it's being passed down from generation to generation they are merely custodians of the land and will work it damn hard to get an unreliable income from it.

[V8Granite]

Have any of the farming organisations done accurate calculations ?

I mean if the average cost to an inherited farm means finding 50k a year for 10 years then that’s absolutely huge.

Dave!

[Gavster]

They didn't close a loophole they wholesale revoked an exemption.

Yes but closer in line with other disparate businesses does not work for the unique characteristics of farming land.

That's the problem with labour is they set the bar of what they consider "affluence" well below what most people do.

I won't argue with any of those points, but in principle it seems like farmers are now broadly aligned with everybody else

Inherit a farm worth £x million and now face an IHT bill of £y hundred thousand. You either pay that IHT and then own a farm worth £x million, or you sell off part of your inherited asset (a percentage of the land, brand new combine harvester you bought with the Wurzels, whatever) and effectively end up inheriting a farm worth (£x million minus £y hundred thousand), or you sell it and end up with a cash inheritance worth (£x million minus £y hundred thousand).

Unless I am missing something, that would appear to be "the same" dilemma that anyone else who inherits any other business faces today? (Ignoring trust funds and all the other "tax efficient" methodologies out there)

And it would appear to be similar to anyone inheriting a property, who will be hit with IHT.... they will have to pay that, and then need to decide whether they accept they now own a property and (worst case) have a mortgage covering the IHT amount, or they sell the property and end up with a cash inheritance worth (House value minus IHT).

It comes down to a question of whether farming should be considered a business purely and simply in the same way as any other, or whether its role in ensuring food security should exempt it from that.

I've heard a lot of farmers saying that it's a food security issue, however, conflating IHT with food security is a dead cat argument as far as I'm concerned. It could only be a possible valid argument during times of international warfare when there's a significant chance of major supply routes being bombed or blocked (yeah, I know, it's not exactly off the cards!). We've always been very highly dependent on imports for food security, if you go back 100 years we were only 30-40% self sufficient and that has increased to around 60% now. The conversation about food resilience to ensure food security is quite separate, and besides, I've not seen anyone explain why IHT will prevent land from being farmed - it will simply change ownership and carry on being farmed.

[Gavster]

Have any of the farming organisations done accurate calculations ?

I mean if the average cost to an inherited farm means finding 50k a year for 10 years then that’s absolutely huge.

Dave!

AFAIK everyone is still arguing over the figures, the farmers organisations and the gov's figures are utterly polarised.

[Rich B]

So we're agreed? Just abolish IHT and all this goes away.

The problem is that farmers' farmland isn't really an asset worth £££ if it's being used to put turn a meagre wage - when it's being passed down from generation to generation they are merely custodians of the land and will work it damn hard to get an unreliable income from it.

Thats certainly true for some farmers.

[mik]

Have any of the farming organisations done accurate calculations ?

I mean if the average cost to an inherited farm means finding 50k a year for 10 years then that’s absolutely huge.

Dave!

You'd need to inherit a farm worth £5.5 million to end up with an IHT burden of £500k (or £50k PA x 10 years).

If a business is completely unable to generate £50k profit each year, then how could it have been valued at £5.5million? (less the value of the abode on said property obviously)?

See my earlier post.

Option 1. You take that on the chin and find/borrow £50k PA, and end up with a loan/mortgage for £500k and an asset worth £5.5 million
Option 2. You sell off land / equipment to the value of £500k and end up with an asset worth £5million
Option 3. You sell the farm for £5.5million, pay your £500k IHT and end up with a cash sum of £5million

[GG.]

Have any of the farming organisations done accurate calculations ?

I mean if the average cost to an inherited farm means finding 50k a year for 10 years then that’s absolutely huge.

Dave!

You'd need to inherit a farm worth £5.5 million to end up with an IHT burden of £500k (or £50k PA x 10 years).

If a business is completely unable to generate £50k profit each year, then how could it have been valued at £5.5million? (less the value of the abode on said property obviously)?

See my earlier post.

Option 1. You take that on the chin and find/borrow £50k PA, and end up with a loan/mortgage for £500k and an asset worth £5.5 million
Option 2. You sell off land / equipment to the value of £500k and end up with an asset worth £5million
Option 3. You sell the farm for £5.5million, pay your £500k IHT and end up with a cash sum of £5million

Business valuations don't always work like that unfortunately. Twitter only made profit in 2 out of 8 years since IPO but Musk bought it for 44bn

They can make a lot of revenue but very little profit. Revenue may also include paying wages / expenses of the farmer and all his family as employees but not enough to meet big tax bills. The liquidation value of the farm would also include very expensive capital assets.

Essentially what it comes down to is that farms are worth more in bits than as an economic enterprise - this is why this whole debate has arisen. If you tax them based on asset value then the result will be that they're split up and liquidated, to everyone's detriment.

[Jobbo]

Have any of the farming organisations done accurate calculations ?

I mean if the average cost to an inherited farm means finding 50k a year for 10 years then that’s absolutely huge.

Dave!

You'd need to inherit a farm worth £5.5 million to end up with an IHT burden of £500k (or £50k PA x 10 years).

If a business is completely unable to generate £50k profit each year, then how could it have been valued at £5.5million? (less the value of the abode on said property obviously)?

See my earlier post.

Option 1. You take that on the chin and find/borrow £50k PA, and end up with a loan/mortgage for £500k and an asset worth £5.5 million
Option 2. You sell off land / equipment to the value of £500k and end up with an asset worth £5million
Option 3. You sell the farm for £5.5million, pay your £500k IHT and end up with a cash sum of £5million

Business valuations don't always work like that unfortunately. Twitter only made profit in 2 out of 8 years since IPO but Musk bought it for 44bn

They can make a lot of revenue but very little profit. Revenue may also include paying wages / expenses of the farmer and all his family as employees but not enough to meet big tax bills. The liquidation value of the farm would also include very expensive capital assets.

Essentially what it comes down to is that farms are worth more in bits than as an economic enterprise - this is why this whole debate has arisen. If you tax then based on asset value then the result will be that they're split up and liquidated, to everyone's detriment.

I think farm valuations are a bit better established than tech startups. Yes, valuations are indeed different in different industries but why aren't the shareholders in tech companies asking for IHT relief?

[GG.]

The point was that profit is not correlative with valuations. No more, no less.

[Jobbo]

I think it was Harry M that said the numbers they've come up with are just wrong as they worked off just what was claimed for the farm exemption only and not the business relief which has also been removed and covered all the plant and equipment. If its anything like the VAT on private schools it will be way off the mark. The ridiculous thing is that this is all just done on back of fag packet maths without any actual studies being commissioned.

Harry seemed to think a typical farm would have 500 acres (so twice the size of his) and would be worth £8m or so. Neither of the two sets of figures being discussed backs up that; I think Harry is very fortunate being located in one of the highest value areas of the country for real estate (the Cotswolds) and is living in a bit of a bubble. He also raised a point about valuation of farm equipment, buildings etc; that's all part of the value of the business if it's required to function and you can't separate the value of a permanent structure from the value of the land it's fixed to - you don't value all these things at whatever they cost to buy new or build. So unfortunately, while I usually respect Harry's opinions, here he's railing against it in the same way as Clarkson and his justifications are not valid - he's just pissed off because of the IHT he's now going to have to pay for what is effectively his hobby. It's certainly not a viable business or living to make £40k a year from an £8m farm in the Cotswolds.

[Jobbo]

The point was that profit is not correlative with valuations. No more, no less.

Absolutely fair - it clearly isn't for tech startups. Farms don't have the likelihood of massive future growth so it's going to be far more tied to existing profit, though.

[ZedLeg]

So we're agreed? Just abolish IHT and all this goes away.

The problem is that farmers' farmland isn't really an asset worth £££ if it's being used to put turn a meagre wage - when it's being passed down from generation to generation they are merely custodians of the land and will work it damn hard to get an unreliable income from it.

That was my point, we should be working to make farming viable again.

Just shrugging our shoulders and letting people hide money in the land isn’t the answer

[mik]

letting people hide money in the land isn’t the answer

[Swervin_Mervin]

I won't argue with any of those points, but in principle it seems like farmers are now broadly aligned with everybody else

Inherit a farm worth £x million and now face an IHT bill of £y hundred thousand. You either pay that IHT and then own a farm worth £x million, or you sell off part of your inherited asset (a percentage of the land, brand new combine harvester you bought with the Wurzels, whatever) and effectively end up inheriting a farm worth (£x million minus £y hundred thousand), or you sell it and end up with a cash inheritance worth (£x million minus £y hundred thousand).

Unless I am missing something, that would appear to be "the same" dilemma that anyone else who inherits any other business faces today? (Ignoring trust funds and all the other "tax efficient" methodologies out there)

And it would appear to be similar to anyone inheriting a property, who will be hit with IHT.... they will have to pay that, and then need to decide whether they accept they now own a property and (worst case) have a mortgage covering the IHT amount, or they sell the property and end up with a cash inheritance worth (House value minus IHT).

It comes down to a question of whether farming should be considered a business purely and simply in the same way as any other, or whether its role in ensuring food security should exempt it from that.

I've heard a lot of farmers saying that it's a food security issue, however, conflating IHT with food security is a dead cat argument as far as I'm concerned. It could only be a possible valid argument during times of international warfare when there's a significant chance of major supply routes being bombed or blocked (yeah, I know, it's not exactly off the cards!). We've always been very highly dependent on imports for food security, if you go back 100 years we were only 30-40% self sufficient and that has increased to around 60% now. The conversation about food resilience to ensure food security is quite separate, and besides, I've not seen anyone explain why IHT will prevent land from being farmed - it will simply change ownership and carry on being farmed.

I specifically meant that it has a role in food security - not that we're entirely dependent upon it.

[Swervin_Mervin]

Have any of the farming organisations done accurate calculations ?

I mean if the average cost to an inherited farm means finding 50k a year for 10 years then that’s absolutely huge.

Dave!

AFAIK everyone is still arguing over the figures, the farmers organisations and the gov's figures are utterly polarised.

That's because (one part of) the Gov't hasn't really done any proper calculations. Even DEFRA wholly disagree with the Treasury's figures.

See also the private school VAT raid.

[Jobbo]

Have any of the farming organisations done accurate calculations ?

I mean if the average cost to an inherited farm means finding 50k a year for 10 years then that’s absolutely huge.

Dave!

You'd need to inherit a farm worth £5.5 million to end up with an IHT burden of £500k (or £50k PA x 10 years).

If a business is completely unable to generate £50k profit each year, then how could it have been valued at £5.5million? (less the value of the abode on said property obviously)?

See my earlier post.

Option 1. You take that on the chin and find/borrow £50k PA, and end up with a loan/mortgage for £500k and an asset worth £5.5 million
Option 2. You sell off land / equipment to the value of £500k and end up with an asset worth £5million
Option 3. You sell the farm for £5.5million, pay your £500k IHT and end up with a cash sum of £5million

Business valuations don't always work like that unfortunately. Twitter only made profit in 2 out of 8 years since IPO but Musk bought it for 44bn

They can make a lot of revenue but very little profit. Revenue may also include paying wages / expenses of the farmer and all his family as employees but not enough to meet big tax bills. The liquidation value of the farm would also include very expensive capital assets.

Essentially what it comes down to is that farms are worth more in bits than as an economic enterprise - this is why this whole debate has arisen. If you tax them based on asset value then the result will be that they're split up and liquidated, to everyone's detriment.

[dinny_g]

https://www.theguardian.com/environment ... SApp_Other

[Rich B]

https://www.theguardian.com/environment ... SApp_Other

[Mito Man]

Stopped reading when I got to here "We are heading for 2C of global heating in the coming decade, resulting in billions being killed"

As a way to rapidly reduce strain on the earth, killing billions of people with a 2C increase in temps would be a very good thing for the planet.
Can't make an omelette without breaking some eggs