The farming industry has voiced its concerns over possible changes to inheritance tax rules and the removal of subsidies for red diesel expected to be included in the Chancellor’s budget announcement next week.
Managing director of Shropshire-based Madeleys Chartered Surveyors, Paul Madley, has said any changes to Agricultural Property Relief under Inheritance Tax would ‘tear the farming industry apart’.
The current relief rate for agricultural properties is 100 percent, but Madley believes any move away from that will see many farmers unable to invest in their long term future and keep their businesses for the next generation.
He said: “There has been a 100 percent relief for as long as I can remember, and changing it is quite a serious thing, with big consequences for the farming community. This will be of detriment to the ordinary farmer who are often asset rich, but income poor. It would be one of the biggest shake ups that agriculture has seen, and it could tear the farming industry apart.
“It’s more important than ever that farming is properly supported. Just look what is happening with Coronavirus for example. There’s a chance that we’ll need to be self-sufficient, but taking away from farmers makes that less likely.”
The Royal Association of British Dairy Farmers (RABDF) has urged the Government ahead of next week’s budget not to remove the subsidy for red diesel in agriculture over fears it will have grave consequences for the sector.
The association has sent a letter to Secretary of State for Environment, Food and Rural Affairs, George Eustice, warning him of the implications it will have on dairy farmers if the subsidy is removed.
RABDF Chairman Peter Alvis said: “The Government must understand that farmers and contractors have no alternative to red diesel, so removing the levy would hit them hard. Not only will it affect them directly in their own fuel costs, it will also result in other fuel-related price increases including contractors and fertiliser.”
The National Association of Agricultural Contractors (NAAC) has echoed this sentiment, in a statemnt that calls the exemption of rebated fuel for red diesel is ‘vital’ to maintain food production.
It said: “In times of huge uncertainty, alongside a wet autumn, the industry is already struggling with financial reserves and the removal of the lower fuel duty would be a devastating blow that could push many contracting businesses to fail. By almost doubling fuels costs this would potentially add hundreds of thousands of pounds of input costs each year which is currently unsustainable.”
Currently, the duty levied on red diesel is 11.1p, compared to 57.7p for standard fuel. Agriculture accounts for approximately 7% of the total lower rate fuel use in the UK. If the subsidy is removed it stands to raise an additional £2.4bn for Government as well as helping them reach the net-zero emissions goal by 2050.