Targeting inheritance tax?


Louise Speke CLA Chief Taxation Adviser comments on the recent media and political interest surrounding Agricultural Property Relief

Inheritance tax (IHT) is under scrutiny as never before in my 6 years with the CLA.  IHT is currently being reviewed by the Office of Tax Simplification. Their second report looking at the detail of IHT and its reliefs, including APR, is due to be published before Parliament breaks for the summer recess. However, they have already confirmed in the first report published in November 2018 that they will not recommend the removal of APR or business property relief. 

Many of you will have seen last weekend’s Countryfile on BBC One which featured a piece exploring “who owns the countryside.”

The TV report explored arguments around land ownership highlighting that half of England is owned by less than 1% of people and that many companies and individuals are turning to land investment as a means to “avoid taxes”.

The piece also brought to the fore a number of associated issues, rather prematurely in advance of the OTS's report, the role inheritance tax reliefs play and the potential reform of Agricultural Property Relief (APR).

This week also saw the publication of Land for the Many, an independent report commissioned by the Labour Party. Received by many of the newspapers as an attack on the very concept of property and land ownership, the reality is that the numerous recommendations are not currently party policy and at this stage are ideas some more fully formed than others.

One of these recommendations was around changes to APR where it called for future reform “with a view to preventing the use of farmland as a tax shelter for land speculators, while protecting genuine small farms.”

In the Countryfile piece, tax campaigners also recognised the fact that genuine small farms needed to be protected by APR. Their suggestion was that financial caps could be introduced, or that it could apply only to farming families who have owned the land for 10 years or more.

Countryfile and Land for the Many independently urges caution over APR reform, which is probably not as easy in practice as it may first appear, as illustrated by the length of time the OTS is spending on its review of IHT. Ideology doesn’t always trump pragmatism and policymakers will be wary of reform leading to unintended consequences.

Many of you may be sitting there uneasy at this renewed interest in APR which is, after all, of critical importance to farming and rural business. Please rest assured the CLA will continue to make the argument, to Labour and all political parties, that these reliefs are vital to the rural way of life, as well as for national food production, society’s ambitions for the environment and tackling climate change.