Rachel Reeves’ inheritance tax (IHT) raid on farmers should be scrapped completely. You may remember that she decided in her budget (which one?!) that IHT should be paid on farms valued at £1 million. This was a tax on families who have owned farms for perhaps generations.
After a concerted campaign by British farmers, and an enormous amount of pressure upon her and the Prime Minister there was a U-turn and the threshold at which British farmers pay IHT will now be £2.5 million thereby taking most family owned farms out of this tax burden.
With this revised threshold, the Sunday Times reports that the total amount that will be raised by this tax in one year, will be just £300 million.
This is not enough even to pay (at the higher estimate), the interest on the UK’s national debt which is projected to be an average of approximately £288 million to £345 million per day.
To be clear this iniquitous tax will not raise enough in one year, to pay the interest payments on the country’s national debt for one day,
In short, it is a complete failure and a waste of time. Even at the increased threshold of £2.5 million the tax is simply not worth continuing with when bearing in mind the downside in relation to the upside.
There was talk of elderly farmers thinking about committing suicide in order to bring their death forward to avoid the time when the tax commences. This will be in April of next year.
The U-turn is politically damaging to Sir Keir Starmer and Reeves because it is yet another indication of very poor judgement in deciding to impose this tax from farmers in the first place
There appears to have been no attempt to discuss the tax with National Farmers Union beforehand in order to sound out farmers’ reactions. The then President of the National Farmers Union, Baroness Batters, had found near universal opposition among the members not only because of the financial implications but because of the extreme mental toll IHT had taken on individual farmers.
Rachel Reeves met with Baroness Batters on the advice of Starmer after the budget and was horrified on hearing the Baroness’s advice and was clearly concerned about the ramifications of the policy. However, the Treasury still prevaricated.
However, ultimately the pressure built up and Starmer it appears decided on the U-turn and perhaps forced Reeves to go along with it.
The change went off half-cock to try and save face. They did not have the courage to cancel the tax entirely. What’s left is a nonsense.
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