Ministers have refused to answer key questions on the details of their controversial family farm tax policy, leading the NFU and several other organisations to write to the Chancellor calling for urgent transparency on the reforms to BPR and APR (Business Property Relief and Agricultural Property Relief).聽
An FOI (Freedom of Information) request from the NFU 鈥� one of many it has currently lodged with Defra 鈥� along with a similar request from the CLA, was submitted after the government dismissed, without justification, the alternative 鈥榗lawback鈥� option proposed by industry bodies.聽
This option would tax business assets at the full 40% inheritance tax rate, but only if sold by a family successor within seven years of the owner鈥檚 death.聽
Applying a clawback offers a more finessed policy, both meeting the government鈥檚 money-raising objectives while avoiding irreparable damage to the family business community.
Read about the clawback proposal in full.
The Treasury claimed this alternative would raise 鈥渕uch less鈥� than current proposals but has refused to release the modelling for that conclusion, despite both the NFU and CLA individually submitted FOI requests.聽
鈥淎s we outlined in our Spending Review proposals, one of the most significant actions the Chancellor could take to restore trust and unlock investment and growth is to urgently review the clawback proposal.鈥�
NFU President Tom Bradshaw聽
The department stated the information would not be in the public interest.
Not too late to change direction
The letter is urging the Treasury to publish its analysis of the reforms and the clawback alternative to allow for proper public scrutiny.
Signatories warn that "it is not too late to change course and build a constructive relationship with the family business community" and request a meeting to discuss this in addition to how economic growth might become possible.
NFU President Tom Bradshaw reiterated that "the family farm tax is cruel, unfit to become legislation and is triggering a crisis of confidence across the farming sector".聽
He added: 鈥淎s we outlined in our Spending Review proposals, one of the most significant actions the Chancellor could take to restore trust and unlock investment and growth is to urgently review the clawback proposal.
鈥淭丑别 Efra Committee recently underlined the importance of rebuilding trust in the industry. As highlighted in the joint industry letter, publishing the Government鈥檚 analysis of alternative Inheritance Tax reform options and engaging in constructive dialogue around a more targeted approach would be a strong first step in the right direction.鈥�
The letter references the recent study by Family Business UK, which found that the changes could threaten more than 200,000 jobs, reduce tax revenue by 拢1.9bn, and cut almost 拢15bn in economic activity by the end of this Parliament.
The Office for Budget Responsibility also published a supplementary forecast on the costing of changes to agricultural and business property relief, where it said that it is 鈥榟ighly uncertain鈥� whether the measures will raise the 拢500m the Treasury claims it will raise.
The policy has also been challenged by the Efra Select Committee and Labour鈥檚 own tax expert.
Read the letter in full:聽
Dear Chancellor,
We wish to express our grave concern over the government鈥檚 lack of transparency in its reform of Business Property Relief and Agricultural Property Relief.
Among a raft of ideas proposed for finessing the policy to ensure it meets its stated objectives whilst avoiding irreparable damage to the family business community, many industry bodies proposed an alternative, known as the 鈥榗lawback鈥� option. This would tax business assets at the full 40% inheritance tax rate if sold by a family successor within seven years of the owner鈥檚 death.
On 4 March, the Exchequer Secretary to the Treasury responded to a written Parliamentary Question, stating that this option had been considered but would raise 鈥渕uch less鈥� than current proposals.
The CLA (Country Land and Business Association) then submitted a Freedom of Information Request, asking for the basis of that conclusion. The government鈥檚 response of 24 April claimed releasing the information would not be in the public interest.
The stated rationale was to preserve a 鈥榮afe space鈥� for policy development. Yet ministers, including the Prime Minister, have repeatedly stated in Parliament that the policy is final and will not change.
A recent study by Family Business UK鈥攕upported by the undersigned鈥攆ound the reforms could threaten over 200,000 jobs, reduce tax revenue by 拢1.9bn, and cut almost 拢15bn in economic activity by the end of this Parliament. Government鈥檚 inheritance tax reforms will clearly affect the whole country鈥檚 economy. Publishing the requested information is, therefore, surely in the public interest.
We are concerned that this study has been repeatedly dismissed by Ministers, despite being based on robust data from thousands of businesses. Moreover, Ministers continue to cite the Office for Budget Responsibility鈥檚 support, despite the OBR calling the government鈥檚 figures 鈥渉ighly uncertain鈥�.
This undermines trust in policymaking. Therefore, we ask you to publish the UK Government鈥檚 analysis of its IHT reforms and the clawback alternative to allow for proper public scrutiny.
It is not too late to change course and build a constructive relationship with the family business community. We request a meeting with a delegation of the undersigned to discuss this issue, but also to explore how economic growth might become possible.
Yours sincerely,
- Victoria Vyvyan, President, Country Land and Business Association
- Tom Bradshaw, President, National Farmers' Union
- Neil Davy, Chief Executive, Family Business UK
- George Dunn, Chief Executive,聽Tenant Farmers Association
- Debbie Walker, Director General, British Holiday & Home Parks Association
- Ben Cowell, Chief Executive, Historic Houses
- Fran Barnes, Chief Executive, Horticultural Trades Association
- Andrew Judd, Chief Executive, National Association of Funeral Directors聽
- Sue Robinson, Chief Executive, National Franchised Dealers Association
- Emma Mosey, Chair, Farm Retail Association
- Rob Driscoll, Director of Legal and Business, Electrical Contractors鈥� Association
- Chris Cassley, Policy Director, Construction Plant-hire Association