Inheritance tax breaks ‘hit small farmers’ claim campaigners

A radical re -think of the amount of inheritance tax relief available on agricultural property would help discourage rich investors from ratcheting up the price of land and denying small farmers the opportunity to expand, a campaigning group has claimed.

Tax Justice UK also said that relief available was costing the government almost £1 billion a year in total, the majority going to wealthy families.

Stating that the amount of tax foregone could have been invested in the NHS and schools instead, the organisation’ s executive director, Robert Palmer said :“There is no justification for politicians allowing costly tax breaks to continue to operate this way.”

He claimed that the report challenged the assumption that the tax breaks were needed to support smaller family businesses and farms, saying they fueled property inflation which could price many out of farm ownership entirely.

While estate agents commonly promoted inheritance tax relief as a sweetener to investors interested in buying farmland, Palmer said that institutional investors also saw agricultural property relief as an efficient tax break.

Stating that the aim was not to deny working farmers the ability to hand on their businesses, he said a cap should be placed on the amount of relief available to estates valued at over £1 million.

However David Johnstone, chairman of the landowners’ organisation, Scottish Land& Estates, said a clear tax system which was proportionate fair and encouraged investment – particularly in rural areas – was required, adding that investment in land was a long-term option.