Farmers protested in London earlier this month (Image: Getty)
Labour’s Environment Secretary has sparked outrage after claiming will be “good for farming and food production.”
Steve Reed maintained that the farming industry will be boosted by the policy as he addressed the Lords environment and climate change committee.
He said: “If we can stop this upward pressure on land price inflation that stops farmers buying land … and reduce the incentive for wealthy individuals from non-farming backgrounds to buy land to avoid their own tax liabilities, then that’s got to be good for farming and for food production.”
His comments come after to voice their anger at the inheritance tax changes.
Chancellor Rachel Reeves announced in the Budget that Agricultural Property Relief (APR) and Business Property Relief (BPR) will be capped at £1 million.
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Steve Reed said the inheritance tax raid will help farmers. (Image: Getty)
Farmers were previously exempt from inheritance tax altogether. Now, farmers eligible for all of the remaining exemptions will start paying an inheritance tax rate of 20% on any value over £3 million.
There has been debate over how many farmers this will impact. The Government, citing Treasury figures, says just 27% of farms, or around 500 each year, will be impacted.
However, farming groups believe 70,000 of the approximately 200,000 farms in the UK will be affected—about one-third of farms.
One expert has claimed that the number of farmers affected will be five times higher than the Government claims.
Jeremy Moody, secretary of the Central Association of Agricultural Valuers (CAAV), believes 2,500 farmers will be made to pay each year.
There has been debate about how many farmers will be affected. (Image: Getty)
He believes that the Treasury did not account for people who own land but do not have a farmhouse on it, people with tenanted businesses that don’t own the land, or farmers who are shareholders in family companies.
Mr Moody continued: “All of these categories come together to produce really quite a serious number of people, and some of them are really quite significant claims.”
A government spokesman told the Telegraph: “We have been clear since this change was announced that around 500 claims of Agricultural and Business Property Relief each year will be impacted – this is based off actual claims data – and even when inheritance tax does kick in, it is effectively at half the rate paid by others.
“It is not possible to accurately infer inheritance tax liability from farm net worth figures as there are different circumstances affecting each farm, such as who owns it, the nature of ownership, how many people own it and how affairs are planned.”