Taxation System Should Not Reward Poor Farm Tenancy Practice

The Tenant Farmers Association (TFA) has written to the Chancellor of the Exchequer, ahead of the Autumn Budget, with proposals for reform of taxation to encourage longer, more sustainable Farm Business Tenancies (FBTs).

TFA Chief Executive, George Dunn, said “The Treasury has, down the years, shied away from its responsibility to consider how it can help to influence the market in agricultural tenancies, by rewarding landlords prepared to let land on a long-term basis. The current taxation system does little to encourage good practice, and rewards landlords for taking a short-term approach”.

The Government is challenging the agricultural industry to build resilience, raise productivity, manage risk and secure long-term profitability. The agricultural industry is also front and centre in raising the quality of our environment. It is assisting with the Government objective of ensuring that this generation hands the environment to the next generation in a better state. This includes the contribution of the agricultural industry towards meeting targets for reducing greenhouse gas emissions, an issue with which the industry as a whole is already achieving great outcomes.

“For the tenanted sector of agriculture, of which nearly half is now let under FBTs. It is difficult, if not impossible, to achieve both goals for sustainable businesses and the environment, when the average length of term is only four years or less, and when 85% of all new tenancies are let for no more than 5 years. There is a significant and urgent need to move these metrics to create a longer-term horizon to plan for, and deliver the objectives of sustainable development,” said Mr Dunn.

The TFA’s proposals to encourage longer term FBTs include the following:

  • Restricting the generous, 100% Agricultural Property Relief from Inheritance Tax (currently available to all landlords regardless of the length of time for which they are prepared to let land) only to those prepared to let for 10 years or more.
  • Offering landlords prepared to let land for 10 years or more the ability to declare their income, as if it was trading income for taxation purposes.
  • Clamping down on landowners using share farming, contract farming, share partnerships and grazing licences as thin veneers of trading activity for tax advantage.
  • Reforming Stamp Duty Land Tax to end discrimination against longer tenancies.

“The Chancellor has said that he wishes to simplify the tax system. However, he must ensure to deliver a system that supports wider Government objectives for the agricultural sector including promoting longer term farm tenancies,” said Mr Dunn.

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About The Author

John Swire - Deputy editor of Agronomist and Arable Farmer as well as responsibility for the Agronomist and Arable Farmer and Farm Business websites. After 17 years milking cows on the family farm John started writing about agriculture in 1998 and has since written for a variety of publications and has developed a wide circle of contacts within the industry. When not working John is a season ticket holder at Stoke City and also of late has become a fitness freak, listing cycling, swimming and walking as his exercises of choice.