No change in the budget may feel like a win for farming, says leading agricultural finance expert

Chris Solt, agricultural partner at chartered accountants Lovewell Blake, says that the sector is still coming to terms with the inheritance tax bombshell Rachel Reeves dropped last year – and that she should resist the temptation to meddle further in this year’s announcement.

“Of course, every farmer would like to see a U-turn on the family farm tax in this year’s Budget, or at the very least a raising of the thresholds, perhaps to £5 million from the proposed £1 million,” said Mr Solt.  “As part of the Rural Accountancy Group, we have actively campaigned for change.  But realistically, that is unlikely to happen, as Mrs Reeves doesn’t have that kind of financial wriggle-room in the public finances.

“So perhaps the best we can hope for is that she resists the temptation to meddle further, and lets the sector continue to deal with the fallout from last year’s announcement.”

Mr Solt said that commentators had speculated on a number of further measures the Chancellor could announce, which would exacerbate the situation for farmers.

“From an IHT perspective, the two most damaging things she could do next week are to increase the number of years a donor has to survive after making an exempt gift from the current seven years to, say, ten years, or to impose a lifetime gift allowance – effectively a cap on how much can be passed down through the generations before it becomes taxable.

“With many farmers already putting succession plans into place which use lifetime giving, any changes now would cause significant further disruption.”

Mr Solt outlined further potential announcements in the Budget which would impact on agriculture.  “If Rachel Reeves decides to tinker with the Annual Investment Allowance or capital allowances, or to hike capital gains tax rates – any of these would put further pressure on an already squeezed industry,” he said.

“It is a measure of the pessimism in farming that many people in the sector may take it as a win if nothing happens which would affect agriculture in next week’s Budget.”

Chris Solt is speaking at a free post-Budget agricultural breakfast on Thursday 4^th December at Youngs Park in Aylsham.