February 4th 2025.
On a peaceful Sunday, Scottish farmers gathered together in a powerful demonstration against proposed changes to inheritance tax. The impact of these potential changes has been felt heavily by farm shop owners, who fear that they may be forced to close their doors due to the budget's effects. The Farm Retail Association has issued a warning that up to 700 farm shops could be shut down within the next ten years, leaving farmers in a constant battle with the government.
One of the main concerns for farmers is the rise in employers' National Insurance, which will have a significant impact on their businesses. Additionally, the government's decision to end inheritance tax reliefs for farms worth more than £1million from 2026 has only added to the pressure. The FRA has expressed their frustration, stating that farm shops are being hit from both ends due to the budget's changes.
Despite the farmers' concerns, the government has assured them that their commitment to the farming community remains steadfast. Emma Mosey, the chairman of the FRA and owner of Minskip Farm Shop, shared her thoughts with The Telegraph, saying, "We're facing the inheritance tax changes, which, as with other farms, will mean essentially selling off 20% of assets every generation to pay those extra taxes." The budget announcement has also caused a ripple effect, with the British Retail Consortium warning that it will add £7billion to retailers' costs.
Sean McCann, a chartered financial planner at NFU Mutual, explained the consequences of the £1million cap on agricultural property relief and business property relief, stating that "many farming families will face substantial tax bills, which could endanger many farm shops." For many farmers, diversification has been a means of improving profitability, with farm shops being a popular option. However, the budget's changes have put these shops at risk.
Despite the growing concerns and protests from farmers, Chancellor Rachel Reeves is standing by her budget, believing that it will bring growth to the UK. A government spokesperson also reiterated their commitment to the farming community, stating, "Our commitment to farmers remains steadfast – we have committed £5billion to the farming budget over two years." They also mentioned that a 25-year farming roadmap is being developed to ensure the sector's profitability in the coming decades.
The government's reforms to Agricultural and Business Property Reliefs have been met with mixed reactions from farmers. While these changes may result in a reduced effective inheritance tax rate of 20% for estates, it also means that payments can be spread over ten years, interest-free. This approach has been deemed fair and balanced by the government, affecting approximately 500 estates next year.
Unfortunately, the news of the budget's changes has left many farmers dissatisfied, leading to various protests. In December, tractors drove through Westminster in a show of resistance against the changes to inheritance tax. And in November, around 1,800 members of the National Farmers' Union gathered in London to voice their concerns. It is evident that the farming community is united in their fight against the budget's changes, hoping to protect their livelihoods and the future of their farms.
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