family farm tax policy has been dealt a fresh blow as Britain’s most respected think tank has called for the levy to be delayed.
The Institute for Fiscal Studies revealed this evening that the Chancellor’s Inheritance Tax Changes will force some farmers to sell part or all of their farms to cover the bill.
It urged the Chancellor to introduce a delay to the policy for the next few years to avoid treating some landowners unfairly.
The plans to introduce 20% Inheritance Tax on farms worth over £1 million has sparked widespread fury in the countryside and saw 10,000 farmers march on Whitehall last week.
The IFS’s analysis also damningly concluded that without a delay to the policy, it could impact Britain’s food security, and prevent elderly farmers being caught out by the change.
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The IFS has called for the tax to be delayed (Image: PA)
David Sturrock, senior research economist at the IFS, said: “Current farm owners passing away in the next seven years (but after the new regime comes into force in April 2026) will not have had the opportunity to avoid inheritance tax by making lifetime gifts”.
“If the government wished to give current farm owners the same opportunity to avoid inheritance tax as owners of other assets, it could, for example, make lifetime gifts of agricultural property made before a certain future date inheritance tax free, regardless of the timing of the death.”
Last week it was claimed that Treasury officials were looking at mitigations for the policy, including allowing those over 80 to avoid the tax given the IHT seven year gifting rule deadline will likely have passed for them.
However Downing Street and the Treasury strenuously denied the report.
On Sunday Ms Reeves was dealt another blow, as a former cheerleader for the policy concluded it will clobber farmers while leaving the ultra-rich buying up land to avoid tax largely unaffected.
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Farmers are furious with the Government (Image: Getty)
Dan Neidle, a Labour supporter, had spent much of the past week backing Treasury figures regarding how many farms will be affected by the changes to Inheritance Tax.
He was cited by Labour MPs in defence of the policy, and held up by the as proof that farmers are wrong to believe they will be hurt by the tax hikes.
However in a major U-turn on Sunday, Mr Neidle published detailed new evidence revealing that the Budget will clobber ordinary farmers, while failing to go after the mega-rich tax avoiders it purports to.
After extensive analysis, he concluded that the few hundred mega rich people who have bought farm estates to take advantage of the current tax relief will be “unaffected by the Budget changes”, while the 125 estates worth more than £1.5 million will only be “somewhat affected” and are “not being hit hard enough”.
He admits that the number of farmers affected by the tax will be much higher than previously thought.
Mr Neidle concludes that the Budget does nothing to stop rich people taking advantage of the current low taxes for farmers, and that the cap should be raised “dramatically” so that only the wealthiest farms become subject to inheritance tax.