By GB News (World News) | Created at 2024-12-14 16:56:14 | Updated at 2024-12-14 19:32:40
2 hours ago
Ultra-wealthy farmers are exploiting a tax loophole to get around Rachel Reeves's controversial inheritance tax raids, experts have warned.
A clause known as "gifts with reservation" means families have able to bypass death duty bills by passing down assets.
This can be done more than seven years before their deaths. However, technicalities around the exemption mean it is almost impossible for working farmers to make use of it.
The clause makes it clear the donor cannot benefit from the gift after it has been passed down. This means farmers who continue to live on the farm or run it as a business cannot use the loophole.
Rachel Reeves and Ed Milliband
PA
He continued: "Whereas those who are 'landbanking' farmland with the express objective of mitigating inheritance tax have a distinct advantage over the others.
"It’s grossly unfair and completely goes against the Government’s stated aim. It adds additional pressure to smaller family-run businesses to sell. It risks breaking up these farms."
Agricultural land and business owners have been exempt from inheritance tax since 1984. Labour had pledged not to interfere with farmers’ ability to pass on agricultural land to the next generation tax-free.
A Treasury spokesman said: "The gift with reservation rules are a necessary feature of the tax system to prevent abuse by people gifting assets but still benefitting from them. There remain exceptions to the rules if unforeseen circumstances arise."
Earlier this week, National Farmers’ Union (NFU) president Tom Bradshaw said the inheritance tax charges will take money and focus away from investments to mitigate climate change.
Asked about prioritising what farmers want from the Government, he told the Environment Committee: "Let’s remove this from the agenda while we fix the other problems.
"That’s the challenge is that we’ve bought another problem into the sphere of challenges the farming industry is facing. We know the industry needs to make huge investment to meet our environmental mitigation responsibilities. This takes cash that should be going to invest in the future of our businesses to mitigate environmental risk.”
He added: "This just seems to be a distraction and it’s a rounding error in the budget. It’s not that it’s going to raise a significant amount of money."
