A Labour MP has broken ranks and slammed his own party for imposing inheritance tax on previously exempt farmers in an impassioned speech.
Steve Witherden, Labour MP for Montgomeryshire and Glyndŵr, a rural patch in mid Wales, told his party's treasury minister: “I hope you can forgive my emotion, but when you sit with an elderly farmer and his wife, both who are fighting back the tears, and they tell you ‘if only I could die’ and that ‘if only there was some kind of pill I could take now so that my children won't have to worry about this’, that does have a really profound effect on you.”
It comes as Labour refuses to budge on their decision to impose 20per cent death duties on previously exempt farmers.
Multiple tax experts, rural lobby groups and farming unions have said the tax will wipe out farmers’ profits at a time when the industry is already under unprecedented pressure from adverse weather, spiralling fertiliser costs, environmental laws and a mental health crisis.
They have warned this will lead to many farmers selling up, breaking the backbone of British agriculture, depriving young farmers of their livelihoods and harming the UK’s food security at a time of increased uncertainty in Europe.
This goes without mentioning the possibility of faceless mega-corporations buying up farmers’ land as they will not face inheritance tax bills every forty or so years, and can benefit from bogus offsetting schemes, planting trees and laying solar panels instead of growing food.
All of this comes despite Labour’s public promise to not touch farmers’ inheritance tax laws before the election, something the party has justified with the ‘£22bn black hole’ argument.
Witherden, who was visibly moved, implored fellow MP Torsten Bell and Treasury minister: “Raise the [inheritance tax] threshold if this policy is to target those who buy farmland solely to dodge inheritance tax” and “exempt farmers who, at the risk of sounding macabre but to make myself clear, are too late in life to plan for this proposed change.”
Steve Witherden, Labour MP for Montgomeryshire and Glyndŵr
HoC
Labour’s current threshold for when farmers start paying inheritance tax is £1million worth of assets (land, machinery, farm buildings etc).
Labour stresses this can rise to £3million if married farmers utilise loopholes and gift assets over seven years.
However, as various experts have pointed out, the best tax advice for the last thirty years has been to retain the farm until death.
This means that when Reeves announced the law change in her budget, she swept away thirty years of advice without a word of prior warning.
It has left thousands of elderly farmers terrified they will die within the next seven years and leave their family with a massive tax bill which in many cases will force the sale of the farm, depriving the next generation of their chance to farm land that may have been in their family for hundreds of years.
Witherden continued: “Farming is currently the least profitable sector of our economy, and changes to APR (inheritance tax) are having a significant impact on family run farms.
“A lifelong farmer in my constituency raised her children on her 220-acre farm. Although considered small, the farm is valued at over £1 million. Her 48-year-old son, who was farmed alongside her since the age of 18, had hoped to take over the farm.
“His young daughters now share his passion. Sadly, they now face the prospect of losing the farm they have worked so hard for.
“Let me be clear I support progressive taxation to ensure that the wealthiest pay their fair share towards the upkeep of our society.
“In the 21st century, we see individual plutocrats and super wealthy multinationals buying up agricultural land to avoid paying inheritance tax, with no intention of using it for farming. This reduces our farmed land, which we can ill afford.
“The proposed changes to inheritance tax for farmers come on the back of this and it feels like the straw that broke the camel's back.
“These changes to APR risk having a deeply detrimental effect on working family farms and we are putting something incredibly vital at stake here, food security.”
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Responding, Labour MP and Parliamentary Secretary for the Treasury Torsten Bell outlined the various ways farmers could protect some of their assets from IHT while highlighting the 'dire financial situation' Labour inherited.
Bell ended his speech by telling members present that Labour's plans for farmers were 'very generous' compared with other inheritance tax laws usually charged at 40 per cent.
The comment drew exasperated laughs from around the room as inheritance tax on things like second homes, cars or wealth is very different to farms where highly valuable land and machinery is required to produce the food we eat everyday.
The speech comes as more and more Labour MPs break ranks with their party on Reeves’ inheritance tax plans.
The Treasury says the measure will raise £520million a year by 2030. This is a heavily disputed figure as economists have warned the tax changes have sparked a recession in British agriculture and associated industries that will end up costing the Treasury more in tax receipts than IHT will raise.
Critics have also asked whether it is worth placing such acute strain on an already struggling industry for £520million, a relatively small figure capable of funding the NHS for one day.
Steve Witherden abstained on the Conservative backed vote to reverse Labour's inheritance tax laws.
His seat of Montgomeryshire and Glyndŵr is currently projected to flip to Reform with the Conservatives second and Labour crashing to third.
Defra has been approached for comment.
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