Howes Percival’s Head of Tax advises EFRA committee on farm tax impact

17th December, 2024

Howes Percival’s Head of Tax, Stuart Maggs has given evidence to the Environment, Food & Rural Affairs select committee on 11 December in respect of the new inheritance tax rules and its impact on farmers in practice.

He highlighted that agricultural estates earn a rate of return of only 0.5% - 1% and explained,

This change coming in now has really hit home to farmers because they’re in a situation where there’s nothing they can do about it.

They can’t give away and survive seven years, and even if they could give away, it wouldn’t be effective.

There are rules called gifts with reservation and that means if you give something away, but you still continue to enjoy a benefit from it – i.e. if you’re one of three families living on the same farm – it’s paying for mum who is a widow and its paying for the parents of the children who are coming up - then mum cant give away the farm without being taxed as if she still owned it on the day of her death.

So she can’t plan - which means this charge will still be a burden. With farms getting a rate of return of about half a per cent to one per cent, it simply means this is going to be unaffordable.

Farms are going to have to sell land or sell up and it’s going to happen a lot.

A recording of the committee meeting can be viewed here.

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