Hedge fund managers could buy land, MPs told, as Tories fail to scrap ‘farm tax’
Hedge fund managers could buy up farmland if UK farmers sell up to avoid the inheritance levy, MPs were told, as the Tories brought a vote on the so-called ‘family farms tax’.
Conservative MPs used an opposition day debate on Wednesday to bring a Commons vote on Labour’s Budget measure which would see farmers pay higher rates of inheritance tax (IHT) if they pass down their farmland after their death.
Chancellor Rachel Reeves announced the planned changes to agricultural property relief (APR) and business property relief (BPR) in her first Budget, which opponents argue could see farming families face tax bills of up to millions of pounds.
Farmers would pay a rate of 20 per cent IHT on agricultural property and land worth over £1m when they previously paid none, with a £3m threshold for couples passing on farms.
Treasury figures project around 500 estates a year will pay IHT under the changes, but shadow environment secretary Victoria Atkins cast doubt on the numbers, highlighting National Farmers Union (NFU) which suggest “some three quarters” of farms could be hit.
Speaking in the debate, North Cotswolds Tory MP Sir Geoffrey Clifton-Brown asked: “What the government fails to answer is that when this land goes on the market, what kind of person will buy it? It won’t be the ones that have farmed the land all their life.
“It will likely be foreign investors and hedge fund managers. They will not have generations of knowledge to work this land and will likely take prime arable land out of production, as they could possibly make more money from alternatives.”
Tax change promises?
While Labour MP, Markus Campbell-Savours, warned the Chancellor he would oppose the policy in a “real vote” on the plans as he was “not prepared to break my word” to farmers.
The MP for Penrith and Solway, in Cumbria, said he would lobby the Treasury and the Department for Environment, Food and Rural Affairs (Defra) for “important amendments”.
Campbell-Savours, who said he was the Labour MP with the most farms in his seat, vowed: “Let me be clear, if today was the real vote I would vote against the government’s plans.
“I’m no rebel, I’m a moderate. But during the election I read what I thought were assurances from my party that we had no plans to introduce changes to APR.
“On this basis I reassured farmers in my constituency that we would not. Now, I’m simply not prepared to break my word.”
But he said the Tory motion – a Parliamentary process to grant the opposition a chance to set the day’s agenda – was “frankly irrelevant” and that they “failed to deliver for my farmers”.
Atkins said the vote, which was rejected by MPs by 339 votes to 181, with a majority of 158, was aimed to give rural Labour MPs “time to reflect” on what she called a “vindictive” tax.
Farms ‘feed us and need us’
“They feed us and now they need us. Labour MPs need to join us and axe the family farm tax,” she added.
While SNP deputy Westminster leader Pete Wishart argued Labour had an “urban-centric view” of the country through a “metropolitan lens”, meaning farmers “don’t fit the bill” under the party’s definition of working people.
But Treasury minister James Murray insisted the government had a “steadfast commitment” to farmers and stressed their “immense contribution to the UK economy and the nation’s food security”.
However, he refused to say if the Treasury would “do a U-turn”, when asked by Reform UK deputy leader Richard Tice, if the data showed ministers “got this catastrophically wrong”.
“We make sure that any conclusions we draw are based on the correct set of data,” he stressed.
After the vote, Atkins added: “Rural Labour MPs toed the government line, and with every speech it became ever clearer that they don’t understand British farming or the countryside.
“Labour MPs in rural areas will now need to go back to their constituencies and explain why they think that party politics are so much more important to them than local farmers.”