Time running out for farmers in IHT battle

The farming sector has potentially just three months left to persuade the government to adjust its planned changes to inheritance tax (IHT) relief, before it is put into legislation.

The Finance Bill, which covers the proposed changes on IHT, is scheduled to be voted on in either September or October this year, following the parliamentary recess.

At a roundtable discussion with farmers in Bedfordshire on 23 June, shadow farming minister Robbie Moore said time was running out and the government had given no indication so far that it was going to change its mind.

See also: IHT planning must include an all-round review of assets

Mr Moore suggested that Labour’s strong majority in parliament would make it very difficult for the legislation not to pass, adding that even the Labour MPs who had spoken out against the policy would be likely to still support it in the chamber.

He suggested the only team within government that could influence a change now was effectively the chancellor and Treasury ministers.

He said: “We have between now and then to convince them that having a cliff edge is the wrong thing to do and that it will impact far more businesses than they are saying.

 “We are all duty bound to advocate that actually this will have a severely negative impact on many businesses.

“From a parliamentary perspective [the Conservatives] will absolutely continue to keep the heat on.”

Potential amendments

If the legislation passes unscathed as predicted through the House of Commons, it will then be scrutinised in the House of Lords, which could provide a chance for amendments to be tabled.

However, any proposed amendments would then have to be voted on again by MPs.

Mid-Bedfordshire MP Blake Stephenson, who hosted the roundtable at Disco-licous Farm Shop near Bedford, suggested the debate in the House of Lords was likely to be much more focused, as the chamber had specialists who could talk through the legislation at their own pace.

He said: “We may see some nuance, we may see some debate, but the Lords won’t vote down the Finance Bill.”

Last month, the Environment, Food and Rural Affairs (Efra) committee put forward a report to Defra advocating for a delay to the implementation of the IHT relief changes.

Mr Moore said Defra may still be considering the Efra committee recommendation, but it has not given any indication at the moment that ministers are willing to consider a delay.

Family businesses

Changes to tax reliefs are set to impact not just farming operations, but family-run businesses across all sectors.

As a result, the Conservatives are calling for the full 100% relief to be reinstated for both Agricultural Property Relief (APR) and Business Property Relief (BPR).

Former NFU president and former AHDB chairman, Sir Peter Kendall, suggested that more could be done to find some middle ground between the industry and the government.

He said: “It’s quite easy to paint the industry as being privileged, entitled and looking after itself when we oppose the whole legislation in its entirety.

“If we could pull the wider industry together and try and change that cliff edge cut off of 1 April, there is potential to get some movement in the area, rather than saying the whole thing is outrageous.”

Scope for future reversal

It is unlikely the Labour government will make any further substantial changes to IHT during the current parliament, if it passes through later this year.

However, future governments may be more willing to make adjustments.

The Conservative party has already pledged to revert the policy, although the first opportunity this could even possibly take place would be at a Budget following a general election, if the Conservatives were to win.

Mr Moore said: “If we are lucky enough to get back into power, we have absolutely said we would put back in the 100% relief for APR and BPR.”