Richard Broadbent, a former lawyer at authorities adviser Pure England, mentioned the federal government had created a “chilling effect” on nature restoration schemes by making farmers pay inheritance tax whereas additionally anticipating them to offer over land to create and enhance pure habitats.
Chancellor Rachel Reeves introduced on the October price range farmers must pay 20% inheritance tax on farms value greater than £1m from April 2026. All farms have been beforehand exempt.
These in favour of the change say it’s going to considerably cut back using agricultural property for large-scale tax avoidance, guarantee a better relationship between the agricultural and market values of land, and create a higher variety of land possession.
However the transfer has been condemned by farmers who once more took to Whitehall of their tractors on Monday in protest.
The Nation Land and Enterprise Affiliation (CLA), which represents 26,000 landowners and rural enterprise house owners, mentioned the federal government was “taxing the future of farming, food security, and the environment itself”.
Mr Broadbent, now an environmental lawyer at Freeth’s, labored with Pure England’s authorized crew on the biodiversity internet achieve (BNG) coverage, launched by the Conservatives, which suggests new property developments in England, as of February 2024, should end in extra or higher high quality pure habitat than earlier than improvement.
This primarily includes builders paying landowners, usually farmers, to show over their land to nature, which may contain establishing grassland and woodlands or creating nature habitat banks.
Agreements are made for not less than 30 years and might be a long time longer, as it will probably take that lengthy to determine nature restoration schemes.
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Builders have to make sure their initiatives depart the atmosphere higher off, so are primarily paying farmers to take action. Pic: iStock
Farmers will ‘assume twice’
Mr Broadbent mentioned as a result of many farmers have been now contemplating giving components of their land to different relations to keep away from paying inheritance tax, this might have a detrimental impact on BNG.
“If you’re a farmer and thinking of parcelling up your land to various family members seeking more tax efficiencies, or if you’re worried when you die they will have to break up the farm to pay for inheritance tax, you’re going to think twice about entering into a long-term nature recovery scheme,” he mentioned.
“You’re also getting private sector money and they’re going to want to know that you’re going to be able to adhere to the contract as well.”
He mentioned inheritance tax and the environmental incentives have been “creating a conflict which doesn’t seem very sensible”.
“The anti-growth message is clear: don’t spend, don’t invest, don’t improve – just save money to keep the farm in the family.
“The Treasury has barely accounted for the financial injury of this coverage, not to mention the hurt to the land itself. They don’t seem to be simply taxing land values, they’re taxing the way forward for farming, meals safety, and the atmosphere itself.”
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Vertical farms purpose to create an atmosphere the place you’ll be able to develop crops, stacked on prime of one another in excessive density, doubtlessly bringing manufacturing nearer to the shoppers.
Environmental schemes may push land values up
There may be additionally concern nature restoration schemes will improve the worth of farmland, which may push farms over the inheritance tax threshold or imply households should pay extra.
“We want to be getting the best nature on our land with the investment we’re putting into it,” Mr Broadbent mentioned.
“But if you’re a farmer you’re worried that that’s going to inflate your tax bill. Again, we’ve created a chilling effect on that.”
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The Final Straw: A yr on a farm
Extra intensive farming
One other fear is farmers will intensively farm the land they have already got as an alternative of buying extra land to develop the identical quantity of crops or maintain livestock as they don’t wish to push the worth of their farm up.
Intensive farming has been related to river air pollution, poor animal welfare and public well being issues.
“People will want to more intensively farm to get more money out per hectare so they have the cash available when they need to,” Mr Broadbent added.
“It’s a natural response but that’s the kind of incentives it’s giving people.”
