Tax change threat to farmers, Commons told
By Press Association and FWi staff
THE Governments proposal to abolish capital gains tax relief would be a further nail in the coffin for farmers, a Tory MP warned the Commons today.
Nick St Aubyn (Guildford) said during a debate on the Budget-enacting Finance Bill: “Anyone who lives in a rural area and owns a farm is going to find that the new tapering rules … will do very severe damage to the long-term value of their holding.
“When someone who has farmed all their life comes to dispose of their farmholding, … they will find that, whereas under the old rules they would not have had to face any form of capital taxation, suddenly, on their retirement when they sell their farm, they are going to be hit with a tax bill, thanks to this Government,” he said.
Until now, farmers have been able to reduce or eliminate capital gains tax (CGT) using retirement relief which exempts the first £250,000 of gains from CGT and 50% of the next £750,000.
This will be replaced by the so-called “taper” system, to be phased in from April 1999, which sets high initial levels of tax and gradually reduces them to 10% after 10 years or more of assets ownership.
Mr St Aubyn added: “It used to be said in the farming community, they hoped `to live under a Labour Government and die under a Conservative one. Well, now they cant even afford to retire under a Labour Government.”
Replying, Treasury Financial Secretary Dawn Primarolo defended the changes, on the basis that they were essential to promote long-term investment and risk-taking.
She said the tapering measures proposed by the Government would encourage investors to take a long-term view – and reward those who met the challenge.