The super rich are attacking plans to close agriculture tax breaks

(Image: Knowsley Hall, the 19th Earl of Derby’s family seat since 1385)

The billionaire owners of some of the UK’s biggest country estates are pushing back against government tax reform that would see them pay more tax.

They’ve been all over the press, whipping up public anger over changes that will affect only around 200 of the wealthiest landowners per year.

This is the inheritance tax debate currently raging among farmers. It follows changes to agricultural reliefs two weeks ago at the Budget.

We want to make the case for reforming how farmland is taxed in this post – and talk about where some of the opposition to reform is coming from.

We support farmers

First it’s important to say that we know farmers work very hard under difficult circumstances – and that they’ve not been treated well by recent governments or events.

We understand there’s a lot of anger among farmers at the moment. And we know the reforms could do more to protect smaller farms and support people through the changes: it’s encouraging to see the government are looking into how the reforms will affect farmers.

But changes to agricultural property relief in the Budget will affect a small number – and many of the effects may even be positive for farming, for example by limiting non-farmers buying up land to avoid tax. The extra money raised from the tax change will bolster our public services.

What has changed

In the Budget two weeks ago, inheritance tax relief on agricultural land was removed.

Previously big landowners were able to pass on all of their agricultural land without paying inheritance tax on it via this tax relief.

This had drawn the very rich towards agricultural land as a vehicle for avoiding inheritance tax.

One high profile example is Jeremy Clarkson, who said in 2021 that avoiding inheritance tax was “the critical thing” in his decision to buy his farm.

This has led to a situation where ordinary farmers are being priced out of farming as land prices rise steeply – due to the super rich hoovering it up to avoid inheritance tax.

Up to £3 million tax free

Following the Budget, agricultural estates will now have to pay 20% inheritance tax above a new £1 million threshold when they’re passed onto the next generation. This is half the standard inheritance tax rate of 40%.

Yet generous exemptions still remain, with the Chancellor suggesting that many farming families can in effect pass on up to £3 million tax free to their children if the farm is owned by a married couple.

Only a small number of estates are valued above this, meaning only the richest landowners will be affected by this change.

According to research by the Centre for Tax Analysis, only around 200 farms a year (out of 1,300) are passed on to the next generation that are worth more than £1 million.

Our executive director Robert Palmer explained the situation on BBC Radio 2.

Those making the loudest noise

The majority of those with farmland will not be affected by the changes in the Budget.

Many of those loudly complaining in the press are huge landowners with estates worth substantial sums.

Let’s take an example. Billionaire entrepreneur James Dyson slammed the changes as “spiteful” and “ignorant” in a piece in The Times. 

Dyson’s farming company owns an estimated 33,000 acres of land, worth around £500 million. Under the tax changes, he could now be liable to pay tens of millions of pounds in inheritance tax.

The 19th Earl of Derby, whose family has owned Knowsley Hall since 1385, took to the Financial Times to complain that the changes would make things harder for big landed estates.

We were quoted by Nick Abbot on LBC, who summed up this situation perfectly: “the wealthy arrange their affairs to minimise their tax – and they say it’ll hurt you if they have to pay more.” It’s well worth a listen.

“Don’t be fooled”

With all of this noise, it can be hard to hear the perspective of ordinary farmers, rather than gigantic landowners.

Guy Singh-Watson, a farmer who founded Riverford Organic, wrote last week in The Guardian that while he thinks the changes could have been better designed, he was broadly supportive.

In the piece titled “I’m glad to see tax loopholes closing for cynical investor landowners,” he gives a fascinating perspective on the situation.

“Don’t be fooled”, he writes, “those who are pushing the hardest against this change to inheritance tax… don’t represent farmers.”

“They represent the super-rich who don’t want to contribute their fair due, and are simply buying up our country to keep more money and assets for themselves.”

As Singh-Watson says “Our country desperately needs investment in its crumbling infrastructure…  it would be a fantasy to think that could be achieved without some people paying more tax.”

It is fair to ask those with the broadest shoulders to pay a bit more to help repair our struggling public services, as I told LBC News responding to the Budget.