Tractor Tax will hit working farmers worse

The Independent reports that a think tank that championed the controversial Labour policy of levying an inheritance tax on family farms, has argued that the measure should be watered down.

The paper says that the Centre for the Analysis of Taxation (CenTax), which has been broadly supportive of the idea of a so called ‘tractor tax’, warned that landowners were “less likely to be impacted by the reform than working farmers”. The changes mean that farms valued at £1m or more will be liable for 20 per cent inheritance tax:

CenTax found just 20 per cent of landowner estates would be hit by the tax, compared to 25 per cent of tenant farmer estates, 45 per cent of owner-farmer estates, and 67 per cent mixed tenure estates.

CenTax said: “Landowners are less likely to be impacted by the reform than working farmers, representing 64 per cent of all farm estates but 42 per cent of impacted farm estates. Owner-farmers represent 17 per cent of all farm estates but 37 per cent of impacted farm estates.”

Mo Metcalf-Fisher, from the Countryside Alliance, said: “Labour ministers repeatedly say they want to protect genuine family farming businesses, while tackling tax avoidance, through inheritance tax changes.

“The evidence, however, points to it being these very families and their farms that will be badly impacted by the policy, as it stands.

“There is still time to listen to experts from the farming sector and rethink the policy before it’s too late.”

Ministers said that the change was brought in to prevent tax avoidance, but it seems that those who said it will hit farmers worse were correct. Yet another misstep by the Chancellor of the Exchequer.