Why are farmers ploughing ahead with a major protest?

Not so very long ago, agricultural property relief (APR) from inheritance tax was one of the more obscure corners of the UK tax code.

- SEAN O'GRADY

Now, with changes in the Budget reducing the previously completely tax-free treatment, the farmers are angry and they’re preparing for a massive demo in London on Tuesday. The issue has been clouded by some confusion about figures, a considerable amount of passion and, now, a public row between two government departments. While the Treasury needs to raise some cash, the Department for Environment, Food and Rural Affairs (Defra) is concerned about the sector and the many votes Labour picked up in previously unpromising rural and semirural constituencies. It looks like it is becoming the defining political battle of the autumn…

What’s the problem?

Fairness dictates that different people and classes of people should pay the same kind of tax on their income, capital gains, inheritances and so on, with few exceptions. We’re all faced with the same income tax allowances and rates, for instance, regardless of family circumstances or occupation. Similarly, the argument runs, a farmer inheriting, say, an £8m estate should be liable for the same tax bill as someone inheriting a £8m house or painting.

The contrary argument is that farming is special in the sense that it is usually asset-rich but cash-poor, and an inheritance bill of, say, £1m would be ruinous for a farm that only generates £100,000 income, even under the easy instalments scheme. Farms would have to split up, to the detriment of their viability, food security and management of the countryside.