Opinion: The case for not taking IHT-avoiding action

olbn Sometimes one observes bravery in plain sight.

In this case, it was a senior partner of a firm of land agents suggesting to his audience of farmers that, shock-horror, there might be a “silver lining” to the government’s introduction of inheritance tax (IHT) on farmland.  

We were all eating a complimentary meal laid on by his firm, so we were reluctant to take offence.

But that still didn’t stop several elderly members of his audience from almost choking on their delicious locally sourced sausages as they listened to this heresy.

See also: Opinion – spending time with a ‘farming genius’

About the author

Stephen Carr

Farmers Weekly Opinion writer

Stephen Carr runs an 800ha beef, sheep and arable farm on the South Downs near Eastbourne in Sussex in partnership with his wife and four of his daughters. He also runs a nearby pub with his nephew, The Sussex Ox, which serves the farm’s beef, lamb, (and fruit and vegetables from the farmhouse kitchen-garden in season) through its restaurant.

Read more articles by Stephen Carr

Knowing land agents as I do, my initial thought was that the “silver lining” he was referring to must be the queue of ageing farmers that had been lined up outside his office door, seeking urgent tax advice ever since chancellor Rachel Reeves dropped her IHT bombshell last October.  

Indeed, charging their extortionate hourly rates, land agents and rural solicitors up and down the country continue to enjoy a sustained boom.

But no, it turned out that this silver lining was the imposition of IHT on farmland upon the death of the owner was bringing forward much-needed succession discussions within farming families.

This might include, for example, lifetime gifts “by degrees” to the next generation.  

But, again, our host risked alienating his guests by going as far as to suggest that early succession plans might be a good thing anyway as slogging on until you die was all very well but “not everyone’s cognitive abilities are up to scratch into their 80s”.

Was that the rattling of indignant false teeth, the grinding of titanium hip replacements, or the hum of suddenly overworked pacemakers I could hear all around me?

Speaking as someone who has, in recent weeks, reached the sensitive age where I am eligible to receive the state pension for the first time (I check my online banking hourly), I felt I should have been more interested in what my host was really saying: “It’s all over, old chap – time to give someone else a chance.”

Like any farmer who owns quite a bit of farmland, I’ve been thinking over the implications of Reeves’ budget since October and have even considered lifetime gifts to my children.

But, eight months after her tax raid, I find myself completely unmoved to take any avoiding action or seek expensive advice about my continued ownership of my farm.

What sort of fun would it be anyway to see my children, with whom I can’t even agree about which football team to support, let alone which crop to grow, take over the management of the farm and control of its assets?       

Also, it turns out, there happens to be a perfectly good business case for doing nothing about the IHT changes.

It’s only a 20% charge payable over 10 years and, by making lifetime gifts, one loses the valuable capital gains tax relief of rebasing land values at probate value if one owns it on death.

So, I’d argue the pros of taking IHT-avoiding action are equalled or even outweighed by the cons. (Mind you, my cognitive abilities may no longer be anywhere near scratch, let alone up to it.)

But for me, the silver lining to Reeves’ budget is that, despite all the fuss, there’s little reason for me to worry or take any IHT-avoiding action.