The CLA View

Proposed inheritance tax changes to agricultural and business property relief continue to capture attention across the rural economy. Many businesses I speak to in our region tell me they face an uncertain future and are planning to withdraw investment in preparation for a large tax bill.

The CLA is continuing its lobbying and campaigning work to reverse or significantly mitigate the policy. In recent weeks we presented a clawback mechanism to the Treasury which was supported by the National Farmers’ Union (NFU), Tenant Farmers Association (TFA) and Central Association of Agricultural Valuers (CAAV). We are united in presenting this joint solution.

This proposes that tax would apply at the full 40% rate on inherited assets sold within a certain period post-death if the proceeds are not reinvested into those continuing businesses.

The Treasury is becoming entrenched in the view that the proposed changes are the only way to raise the revenue it perceives is required, despite indications that our mechanism could bring in the same amount of tax without impacting investment, growth and jobs.

Backbench rural Labour MPs are starting to feel the pressure from their communities, and we continue to produce valuable rebuttals and data for those pushing back on the changes.

The CLA does not have political allegiances - but when decisions are made by politicians of any party that negatively impact members’ livelihoods we have to speak up.

The Labour government has stated over and over that its agenda is securing economic growth. It states that all the measures it is implementing should target that, but we have yet to see the rural economy play a role in this growth agenda.

The Chancellor, Rachel Reeves, has said that unlocking investment in overlooked areas and creating conditions for good jobs are fundamental to this agenda.

This is the same sentiment that the CLA has championed through our Rural Powerhouse campaign; we have highlighted the need to support the rural economy through good digital connectivity, housing provision, investment, and a secure land-based sector.

The rural economy’s main problem has been the lack of ambition to coordinate the many levers needed to make these changes, which stretch across departmental responsibility including planning and housing in the Ministry of Housing, Communities and Local Government (MHCLG), connectivity and rural tourism in Digital, Culture, Media and Sport, and rural as a whole in the Department for Environment, Food and Rural Affairs.

In a positive step recently, and after years of lobbying as part of the CLA's Rural Powerhouse Campaign, Defra announced the creation of a rural taskforce to unlock growth in the countryside.

The taskforce, which met for the first time this month and was attended by the CLA, brings together a dozen organisations representing rural business interests, communities, public services and academia.

It will make recommendations on the policy measures needed for each of the government’s ‘missions’ and aims to report suggestions in July. These recommendations will in turn inform a ’Rural Missions Delivery Plan‘ developed across government departments in the autumn.

To gain traction, the taskforce’s recommendations will need to be practical, lead to tangibly different outcomes, and be based on evidence.

It will need to navigate the treacherous waters of fiscal constraints. With the prospect of government budgets being slashed, we will need to think creatively about low/no-cost solutions, but also about blending public and private funding. Yes, without a doubt, investment in rural infrastructure is needed, but the capacity of local authority planning departments and some of the planning rules don’t help and would not cost much to improve.

Additionally, the current contribution and future potential of CLA members – in terms of housing and community provision, access to nature, and land stewardship – are still under-valued.

The taskforce provides an opportunity for us to speak up for the rural economy and champion the businesses we represent. We will certainly do that.