LABOUR have been warned that Scottish tenant farmers will be hit by their death duties on farms.
Treasury Secretary Darren Jones has been told it is “likely” that farmers with secure agricultural tenancies will be charged inheritance tax under Labour’s plans if they bequeath the farm to their children.
Finance Secretary Shona Robison and Rural Affairs Secretary Mairi Gougeon (below) have written to the Treasury to sound the alarm over agricultural funding after farmers protested outside Holyrood on Thursday.
They said that UK Government effectively cut agricultural funding of 10.4% over the last two years and that a change in the funding formula was setting up further reductions because any increases will be eaten up by inflation.
Alerting the Treasury to warnings from Jeremy Moody of the Central Association of Agricultural Valuers, the Scottish Government said the UK Government must reverse the inheritance tax changes, which will end exemptions for farmers.
The SNP ministers said: “It is likely that even moderately sized tenant farms in Scotland could be caught by these changes and have few of the options available to owner-occupiers to raise the funds necessary to meet an inheritance tax bill.
“At a time when we are seeking to encourage tenant farming and the next generation, this measure presents a considerable barrier, and perhaps even greater than that facing owner occupiers.”
They called on the UK Government to publish impact assessments of the new regime for farmers, tenant farmers and crofters in Scotland.
A UK Government spokesperson said: “Our commitment to our farmers is steadfast – we have committed £5 billion to the farming budget over two years, including more money than ever for sustainable food production, and we are developing a 25-year farming roadmap, focusing on how to make the sector more profitable in the decades to come.
“We have been clear since this change was announced that around 500 claims of Agricultural and Business Property Relief each year will be impacted – this is based off actual claims data – and even when inheritance tax does kick in, it is effectively at half the rate paid by others.
“It is not possible to accurately infer inheritance tax liability from farm net worth figures as there are different circumstances affecting each farm, such as who owns it, the nature of ownership, how many people own it and how affairs are planned.”
