Warwickshire County Council will write to the government asking for family farms to be exempt from new inheritance tax rules following an emotionally-charged debate this week.

Councillors of all parties except Labour backed a motion – a statement of intent – to pen a letter opposing controversial new caps on agricultural property relief (APR) and business property relief (BPR) at the meeting for all councillors which was also attended by Warwickshire farmers. 

There have been protests in various locations across the country with tractors driving to Westminster to oppose the plans. 

A handful of farmers greeted councillors outside Shire Hall with a tractor draped in banners calling to 'Stop the Family Farm Tax', while two presented their case at the meeting, including one who had to fight back tears as he expressed his fear that his dad could become another farming suicide statistic.

What is this about?

Limitless APR and BPR has been around for decades, the idea being that farms can be passed down through generations and keep running without being affected by inheritance tax. 

While the assets of farms – particularly the land – can carry huge values, the returns are typically much smaller in terms of income, hence the protection. 

The new government proposes to bring in a cap of £1 million, meaning any land or farming property value above that will trigger a 20 per cent inheritance tax bill. 

It can be paid over 10 years interest free and land and property can be transferred without incurring the fees provided it happens seven years before death. Additional household tax and married couple allowances may increase the threshold, to up to £3 million for some.

The arguments for and against

Limitless APR and BPR is said to be responsible for farm land prices rocketing with wealthy investors with no connection to farming using it as a means to avoid inheritance tax.

However, it is argued that the government's attempt to close the loophole will prove counterproductive, creating a list of winners and losers in which smaller family farms get caught on the wrong side of the line, needing to sell land that is used for food production just to service a tax bill with the ripple effects impacting the wider economy. 

A Warwickshire farmer's plea

Charles Goadby is a farmer from Ansley, a village to the west of Nuneaton and south of Atherstone.

He told councillors that he is one of three brothers that runs a farm in partnership with their 80-year-old father, the main landowner who took on the site in 1960.

Starting with six cows – four of which were bought on finance – they built a family business over many years by investing all spare cash back into the business.

He estimates that the new rules would land them with an annual inheritance tax bill of between £180-£200 per acre for 10 years.

That is set against an average profit from farming £126 per acre – earnings that he expects to drop to £65 per acre next year due to a drop in farming grants.

"With returns on capital investment so low – below half a per cent – farming and food production is more a vocation than a business," he said.

"We would be forced to sell land to pay the inheritance tax and then additional land to pay for the capital gains tax on the land we have sold.

"What my father has built will be lost. Lost but not gone. Every day it would be there in plain view. He is a proud man and that would destroy him. 

"Already it has been reported that seven farmers have taken their own lives since the budget as a result of this policy. I fear my dad, along with many more, will add to that statistic."

On a practical front, he argued the likeliest buyers of such land would be wealthy investors seeking to avoid other new taxes following the removal of non-dom status and pension relief.

What a councillor who is also a farmer had to say

Councillor Chris Kettle (Con, Feldon) argued the policy had not been thought out, claiming that the treasury had not consulted the Department for Environment, Food & Rural Affairs (DEFRA). 

"Had they done so, they might have been better informed," he said.

"I understand that the practical benefits of passing businesses down generations will carry no weight with those who are not interested in such matters, although family businesses and farms are the bedrock of this nation.

"The UK agricultural sector produces 60 per cent of the food we consume and delivered a gross added value of £13.7 million in 2023, directly employing 462,000 people.

"It has increased productivity since 1973. Farmers have continually adopted new technology but despite this growth, return on capital last year, according to the government's own statistics, was just 0.5 per cent. 

"That return, which is the farmer's income, will not be enough to pay inheritance tax at a rate of four times the land's profitability. 

"The only way to pay is to sell land which destroys the business and the sector."

He said that would not only affect decisions once inheritance comes into play but also day-to-day decision making, posing the question: "Why build a business up, improving productivity, increasing output, only to know that it will be pulled apart on your deathbed as a penalty for your success?

"Farmers do not own land in the normal sense. They can't take it with them, they can't export it, hold it, but they can look after it. 

"They manage it to the best of their ability and look after it for the next generation. That will end for good." 

Whose numbers are right? 

The motion was brought by the Conservative group that runs Warwickshire County Council, meaning it was always going to get passed, but they gained support from the Liberal Democrats, Whitnash Residents and, despite some reservations, the Green Party.

Green group leader Councillor Jonathan Chilvers (Leamington Brunswick) admitted to being "torn" having questioned some of the data used by the Tories.

The numbers are a constant battleground on this issue with DEFRA suggesting only 500 farms per year will be affected and the government anticipating that only the biggest 27 per cent will pay any tax.

The National Farmers' Union (NFU) says that land prices and the high and increasing value of assets will push that up to two-thirds of farms. 

The Conservative motion predicted it would affect 1,700 family farm holdings in Warwickshire alone, "leaving the average farming family with a tax bill of at least £240,000".

"I am concerned by some of the facts and figures," said Cllr Chilvers. 

"On such a sensitive issue, we have a deep responsibility and duty to make sure we present figures in a fair way."

He did, however, express support for the principle of the motion and voted yes following the debate. 

The Labour defence

Councillor Sarah Feeney (Lab, Benn) was keen to set a broader context.

She staunchly said how the "council has not supported farmers" over recent years and that the previous Conservative government "did nothing" to address issues related to the profitability of farming or lost European Union (EU) subsidies following Brexit.

"The farmers who spoke earlier made the issue clear, the system has been wrecked for a number of years," she said. 

"Let's not forget the Conservative government's trade deal with New Zealand that has made sheep farming pretty unprofitable, undercutting our farmers' ability to sell lamb profitably."

Citing the need to fix public finances, she continued: "There are arguably 14,500 children living in poverty in Warwickshire, there are thousands of people who now pay huge amounts more – up to £800 more – in mortgage after the previous government's efforts."

She highlighted £5 billion funding for farmers over the next two years, £60 million to farmers for last year's wet weather and £208 million to help combat future diseases, "significantly more" than the tax.

"When you say we're not doing anything for farmers, maybe Labour is," she said. 

"Maybe you are just not noticing or looking at the wrong things."