Single farmers face greater penalty from 'tractor tax'

Farmers are preparing for their biggest protest so far over the government's proposals to include them in inheritance tax, as they prepare to gather in Westminster today. In the weeks since chancellor Rachel Reeves's announcement, farmers and their representatives have been lobbying hard to have the inheritance tax decision overturned.

- HOWARD MUSTOE

The government wants farmers to pay the tax on assets above £1m apiece at a reduced rate of 20 per cent. The allowance comes on top of the £500,000 a typical homeowner gets if they leave their home to their children or grandchildren, so a married couple can shelter up to £3m from HMRC, a sum which will exclude most farms.

Groups including the Liberal Democrats have suggested up to 70,000 farms could be hit, although this number assumes a limit of £1m for tax-free inheritance rather than £3m. The government claims that the biggest 500 farm estates in the UK will pay the tax per year, with smaller farms “not affected”, and independent analysis by Dan Neidle, a tax expert, suggests that as few as 100 per year will be captured.

But inheritance tax is incredibly unpopular, and farmers who have staff to consider will also have to grapple with higher employers’ national insurance bills, since Ms Reeves wants to lower the threshold at which it is paid. “They’re pretty angry,” says Sam Dewes, a wealth manager whose clients include farmers at HW Fisher.

And the maths favours married couples, which many say is unfair. Indeed, being married on the average farm makes all the difference. According to estate agent Carter Jonas, average arable land is priced at £9,667 per acre, while pasture for grazing goes for £7,833.