Ian Ashbridge on Alastair Darling's nasty surprise for farmers
At first, it looked so benign. Alistair Darling's first pre-budget report had the ring of a fairly unoriginal, but standard-grade piece of school work. He repeated a lot of what Gordon Brown had said in March, nicked a few ideas from the Tories, put the words "I have decided..." in front of them and sat down with a smirk. I gave it a 'C'.
But once the Conservatives had expended their considerable - and not unforgivable - reserves of righteous indignation, we started to see just what Alistair Darling had really meant. And it wasn't pretty.
The long and short of it is that Mr Darling has done two things. Or rather, he has definitely made a brutal and aggressive tax strike on businesses and business assets, and appeared to say something about inheritance tax which was little more than smoke and mirrors.
The good new s on inheritance tax is that he has effectively combined the £300,000 threshold that both spouses had, to allow the survivor to carry-forward their spouse's allowance until their own death. But in truth, with the inheritance tax threshold set so ridiculously low anyway, plenty of people were taking advice and finding away to do that anyway.
The really nasty work was in the changes to the capital gains tax regime. Bad enough that he scrapped business asset taper relief, which allowed farmers to write down tax on sales of business assets like farmland to effectively just 10%. Bad enough that a new arbitrary rate of 18% capital gains tax will apply to both business and non-business assets.
But what we all initially overlooked was his decision to scrap indexation allowance. This protected the inflationary gain in value of assets - like, crucially, farmland - between 1982 and 1998. It meant you only paid tax on the 'real' gain in value, not the 'paper' gain.
But from 6 April next year, when you sell any parcel of land you will be stung on its total gain in value at 18%. Ouch.
If this is to be the hallmark of the Darling Exchequer, we must expect further raids on the few tax advantages agriculture still enjoys - and needs.