Expert rubbish PM's claim about inheritance tax raid on farmers

Experts have questioned Sir Keir Starmer's claim that the 'vast majority of farmers' will not be affected by his government's hated inheritance tax changes - as protesters prepare to descend on London. 

The agricultural section is in open revolt at the decision to levy IHT on farms worth more than £1million for the first time, with critics warning it will stop a new generation of farmers from being able to inherit their parents' estates. 

A protest is expected in Westminster tomorrow, while separately the National Farmers' Union will hold a mass lobby of MPs in their efforts to get the Government to rethink.

Speaking to reporters on the way to the G20 summit in Brazil, Sir Keir said 'it is very important that we support farmers' but he is 'confident' most will not be affected by the changes.

But this assertion has now been questioned by an expert in the agricultural property sector, who believes that nearly half of farms will exceed the £1million threshold based on the value of their land alone. 

'If you just use bare agricultural land values, 40% of farms will be affected,' Rupert Burchett, an Agricultural Property solicitor at Payne Hicks Beach, told MailOnline. 'When you add on the value of farmhouses, diversified farm buildings and so on, that figure skyrockets.

'There is a real and understandable sense of betrayal in our rural communities. It doesn't matter how many times the Prime Minister repeats that the vast majority of farms and farmers will be unaffected - the Government's own figures show that this simply isn't the case. 

'Many farmers are now beginning the process of considering how to mitigate the tax burden that will otherwise decimate the future of their and their families' businesses and livelihoods.' 

Mr Burchett said Sir Keir's claim 'relies on a number of very big assumptions'. 

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'This includes that all farmers will be married, that they will be willing to co-own their farms with their spouses, and that they will be passing their farm to their own children - none of which is necessarily the case even before you start thinking about valuation,' he said. 

'So I would disagree with the PM!'

It comes as a Labour peer waded into the row by warning the tax raid 'smells of incompetence' and is hammering the party's support in rural areas. 

Baroness Mallalieu, who is also president of the Countryside Alliance and a part-time farmer in Somerset, likened the row to Tony Blair's decision to ban fox hunting, which she also opposed.

The barrister, 78, lashed out at the decision to make wealthy farmers pay IHT on the agricultural value of their land for the first time - albeit at a discounted rate.

She added that while many of them 'may have a cottage' they did not interact with people who live in the countryside.

'On the train to Taunton the other day I've had people saying to me, and indeed one of my own relatives, ''I wish I hadn't done it, I wish I hadn't voted Labour''.

'And that is very disheartening… when Labour made what was perceived as an attack on the countryside 20 years ago (the hunting ban) … the result of that was 14 years in opposition. We went down from 100 MPs in rural areas under Blair to just 17. We're now back to 100, and there we are, once again, making the same mistake.'

Farmers have reacted with anger and dismay over the inheritance tax changes for farming businesses, which limit the 100 per cent relief for farms to only the first £1million of combined agricultural and business property.

For anything above that, landowners will pay a 20 per cent tax rate, rather than the standard 40 per cent rate of inheritance tax (IHT) applied to other land and property.

Rural Labour MPs have suggested the level of anger is lower than claimed. Several told MailOnline that all the farmers who contacted them about the change had subsequently discovered they were not liable to pay IHT.

Treasury data shows that around three-quarters of farmers will pay nothing in inheritance tax as a result of the controversial changes.

However, many have challenged the figures, pointing instead to data from the Department for Environment, Food and Rural Affairs which suggests 66 per cent of farm businesses are worth more than the £1 million threshold at which inheritance tax will now need to be paid.

Labour faced protests against the change when the Welsh party had its conference at the weekend.

Speaking to reporters on the way to the G20 summit in Brazil, Sir Keir said 'it is very important that we support farmers' but added: 'Obviously, there's an issue around inheritance tax and I do understand the concern.

'But for a typical case, which is parents with a farm they want to pass on to one of their children, by the time you've taken into account not only the exemption for the farm property itself, but also the exemption for spouse to spouse, then parent to child, it's £3 million before any inheritance tax will be payable.

'That's why I am absolutely confident the vast majority of farms and farmers will not be affected by this.'

However, Baroness Mallalieu told the BBC: 'There was no impact assessment done. The figures differ between the Treasury and Defra, and certainly differ from those of the NFU.

'But I hope what they will do is look at it very carefully, and just see what the unintended consequences were. If they wanted to deal with people who buy farmland not intending to farm themselves but to avoid tax, then fair enough to bring them within the tax threshold.

'But what they've done is to bring in a lot of people who they never really contemplated or thought of as being involved. And it's really small farms. I think they have no idea of the value of farmland... I live in an area where there are a large number of small family livestock farms. And they have been hammered… what can they do, they feel powerless.'

A government spokesperson said: 'Our figures, which are based on actual claims for Agricultural Property Relief, show that around three quarters of claims each year are expected to be unaffected by the changes. Looking at asset value alone does not necessarily mean that the farm will be affected, as it depends on individual circumstances.

'The figures are available for anyone to view online and have been assessed by the independent OBR. They show around 500 claims each year will be impacted and farm-owning couples can pass on up to £3m without paying any inheritance tax.'