Latest news with #inheritanceTax
Telegraph
a day ago
- Business
- Telegraph
Starmer faces fresh MP rebellion over farmers' inheritance tax
Sir Keir Starmer is facing a fresh rebellion from Labour MPs over his inheritance tax raid on farmers. The Telegraph understands that more than 40 MPs are considering mounting an attempt to water down the policy, which threatens to bankrupt family farms by landing them with large inheritance tax bills. Rebels have been emboldened after forcing the Prime Minister to climb down on welfare cuts this week, in the third about-turn for the Government in two months. The U-turns – on benefits, winter fuel payment cuts and a national inquiry into grooming gangs – have added to a £40 billion black hole Rachel Reeves, the Chancellor, needs to fill at the next Budget. In a sign of fraying party discipline, MPs are plotting further rebellions on immigration and the two-child benefit cap, alongside the farming revolt. A senior rebel told The Telegraph: 'It's obviously a Government in crisis and the back benches are feeling ignored. The whole strategy is not working and we've got to change direction.' The fresh threats to Sir Keir's authority come after more than 100 MPs publicly broke with the Government over its disability benefit cuts, leading to a Number 10 climbdown this week. Backbenchers are considering using rebel amendments to exempt small family farms from changes to inheritance tax announced in the October Budget. Farmers have historically been able to pass down their land tax-free. But from April 2026, full tax relief will be capped for estates at £1 million, above which just 50 per cent tax relief will be available. A so-called 'rural growth group' has proposed that ministers consider the impacts of substantially raising the planned £1 million cut-off point at which estates lose valuable tax reliefs. The back-bench group has suggested estates receive full tax relief on the value of agricultural properties up to £10 million, 50 per cent to £20 million, and nil thereafter. This higher threshold would probably exempt almost all small family farms from inheritance tax, with only the richest paying the levy. The changes will be enacted in a Bill due to be voted on by MPs later this year, when they could be challenged by rebels. Sam Rushworth, Labour MP for Bishop Auckland, who is a member of the group, said they would 'consider what amendments to put down'. Mr Rushworth said: 'We are all keen to avoid amendments. I don't want it to get to that point. I am a Labour MP and I broadly support the Government, [but] I would like to see them bring forward different recommendations in the Bill.' A handful of Labour parliamentarians have publicly criticised the so-called 'tractor tax' plans. Markus Campbell-Savours, Labour MP for Penrith and Solway in Cumbria, a rural seat, said in December that he would vote against the Treasury's plans, telling the House of Commons: 'Let me be clear, if today was the real vote, I would vote against the Government's plans.' Sir Keir is also facing opposition to some of his new immigration rules which are expected to be voted on after the summer break, The Telegraph understands. Many of the immigration changes announced by the Prime Minister last month, including changes to visa routes, can be brought into effect without a vote in the House of Commons. However key parts of the proposals, including a new levy on international student fees, will require the endorsement of Labour MPs. A leading rebel told The Telegraph that the Government should spend the summer recess 'reflecting on an evidence-based approach as to how to build effective policies on immigration'. Another said: 'The leadership have to seriously look at their actions on this policy regarding the lack of consultation with backbench MPs.' A number of refugee charities have been lobbying parliamentarians over the changes after their repeated requests for meetings with Yvette Cooper, the Home Secretary, were turned down. 'Biggest mistake to date' MPs opposed to the changes were encouraged this week by the Prime Minister's apology for using the term 'island of strangers' in his speech announcing the immigration changes. One rebel Labour MP said: 'Of course it was right for the Prime Minister to apologise for the language that he used and understand the distress that it caused, but similarly, if the Government listened more on policy, this would be stronger'. This week Sir Keir apologised for the language in the speech, saying he had not read it properly before delivery because he had been distressed by an arson attack on his family home. But he gave no indication that the Government would U-turn on any of its immigration reforms. Nigel Farage, the Reform UK leader, said the apology was Sir Keir's 'biggest mistake to date'. He said: 'This is absolute proof that Keir Starmer has no beliefs, no principles and just reads from a script. 'Only a year into his premiership and he has already made his most fatal error. He has no intention of clamping down on immigration, both legal and illegal. 'This is his biggest mistake to date and one he will not be able to recover from – the public voted for change, instead they're being given more mass immigration and a spiralling crisis at the border. 'We need a leader that has vision and unwavering principles, that man is clearly not Keir Starmer.' Some Labour MPs on the party's Right wing were bewildered by the Prime Minister's sudden apology. One told The Telegraph 'that row-back is the most staggering of all' and said it would further erode discipline. Labour MPs are also bracing for a fight with the Government in the autumn over the two child benefit cap, which many want to see scrapped. The Prime Minister has reportedly committed to scrapping the cap but no announcement has yet been made. In a speech next week, Kemi Badenoch is set to mock Sir Keir's growing roster of U-turns. 'Now that his backbenchers smell blood, there's almost certainly another climbdown on the two-child benefit cap in the offing,' she is expected to tell the Local Government Association on Wednesday. 'Labour told us 'the adults were back in charge', but this is actually amateur hour. The Prime Minister is incapable of sticking to a decision.' A senior Labour party figure said that Downing Street's loss of control over MPs constituted 'an absolute s--- show'. The source said: 'This is an outburst beyond the welfare bill that has broken out. It is from loyal, moderate people who have defended the winter fuel cut for months and then had the rug pulled from under them with the U-turn. 'These are moderate MPs getting constant lobbying from disabled groups and constituents and now they've been told there is money available after all. Those frustrations are largely with Rachel. But they're also with No 10.' 'Now they have lost their patience. It's an absolute s--- show.' Labour MPs have described the past week as a 'deep crisis' with senior government figures forming 'circular firing squads'. One Labour MP said of the Chancellor: 'It's already clear that Rachel Reeves has lost because her whole economic and fiscal strategy is failing on numerous counts. The PM is reversing everything that she wanted to do.' A Government spokesman said: 'Our reforms to agricultural and business property relief are vital to fix the public services we all rely on. 'Three quarters of estates will continue to pay no inheritance tax at all, while the remaining quarter will pay half the inheritance tax that most people pay, and payments can be spread over 10 years, interest-free. 'We're investing billions of pounds in sustainable food production and nature's recovery, slashing costs for food producers to export to the EU and have appointed former NFU president Baroness Minette Batters to advise on reforms to boost farmers profits.'
Telegraph
5 days ago
- Business
- Telegraph
Rachel Reeves faces legal challenge over ‘family farms tax'
A group of farmers and family-owned businesses are taking the Government to court over planned inheritance tax changes. The claim, served to Chancellor Rachel Reeves and HM Revenue and Customs (HMRC) on Tuesday, demands a judicial review of the controversial inheritance tax raid on the grounds the Government failed to carry out a proper consultation on the major reforms. The claimants argue that the Chancellor risks pushing through flawed legislation because of her decision to carry out a limited consultation into the changes which were announced in the October Budget. Rachel Reeves unveiled cuts to inheritance tax relief impacting farmers and business owners as part of her maiden Budget last year. Under the proposals, farms and family-owned businesses will be eligible for a £1m inheritance tax exemption from April 2026, where previously they could be passed on free from inheritance tax. Assets above the £1m allowance will be subject to a 20pc inheritance tax charge. The Government launched a consultation on the plans between February and April 2025. But the group of farmers and business owners say this was too narrow, highly technical and only published after a final policy decision had been taken. They argue the Government therefore failed to meet its obligations to consult on major changes in tax policy. The advice firm, Alvarez & Marsal Tax, has instructed Collyer Bristow, a law firm, to serve proceedings on behalf of the group of affected farmers and business owners. James Austen, of Collyer Bristow, said: 'The claimants' position is simply that the Government should be held to its public law obligations on matters of tax policy. 'This claim does not seek to overturn the Government's decision to amend agricultural property relief or business property relief, but asks that affected individuals and groups can contribute to a proper consultation exercise to ensure the Government has the best possible evidence when developing its tax policy for UK farms and businesses.' The Treasury has estimated the changes will raise up to £520m a year by 2029-30. However, the Office for Budget Responsibility assigned the policy a 'high' uncertainty rating in documents published alongside the October Budget. Thousands of farmers marched in protest after the so-called 'family farm tax' was announced. Campaigners warn the changes threaten the future of thousands of family farms, as many farmers are asset rich but cash poor and would have to sell up in order to pay the huge bills. A Treasury spokesman said: 'We do not comment on potential litigation matters.'
Daily Mail
6 days ago
- Business
- Daily Mail
Glastonbury founder Sir Michael Eavis 'could avoid £80m in inheritance tax' after making key change to festival
Glastonbury founder Sir Michael Eavis could reportedly avoid £80million in inheritance tax after transferring most of his financial interest in the iconic music festival over to his daughter. The event saw its pre-tax profits double to almost £6million last year with revenues reaching a stunning £68million after flogging 210,000 tickets for £300 each. Experts claim Glastonbury - which is set to be headlined this year by The 1975, Neil Young and Olivia Rodrigo - could be worth as much as £400million, while others say in reality it could be far more if it was sold to the likes of Sony or Universal Music. The true value of Glastonbury is hard to quantify because of the money it donates each year to charities. Last year more than £5.9million went to organisations including Oxfam, Greenpeace and WaterAid. But by transferring his entire shareholding in Glastonbury Festival Events Ltd to Emily, 45, 89-year-old Sir Michael's family could save as much as £80million in inheritance tax, The Times reports. Glastonbury described The Times' estimations of its value as 'wildly speculative' and said the festival would 'never be sold'. They said the organisation and Sir Michael himself 'have always been, and will always be, happy to pay their due tax'. The company owns the festival's rights, trademarks and distributes the event's profits to charity. Three quarters of the music mogul's shares have also been transferred to a family trust. Shares gifted to a family member are not taxed under inheritance laws as long as the person who gives them survives for seven years. By taking them out of Sir Michael's estate, they can also reduce its valuation meaning that inheritance tax on his overall possessions is potentially lowered. The shares were transferred to Emily in October and there is no suggestion they knew of Rachel Reeves' upcoming announcement that she would impose death dutues on family businesses. Emily started co-running Glastonbury with her elderly father in 1999 and has gradually become the driving force behind the festival. The family may also face a huge bill on Worthy Farm, the 1,500 acre site of the annual music spectacular, which is valued at as much as £13.5million and is solely owned by Sir Michael. An inheritance bill on the land alone could total £2.5million, The Times reports, and the family has not made any efforts to avoid paying the 20 per cent tariff now faced by farmers across the country whose land is worth more than £1million. Glastonbury Festival said: 'With his 90th birthday approaching, Michael Eavis proceeded with his long-held plan to pass control of the Festival over to his daughter, Emily. 'The past few years have already seen Emily take over the day-to-day organisation of the event, and this latest change was simply another part of that process. 'Glastonbury Festival and Michael Eavis have always been, and will always be, happy to pay their due tax. The Festival is also proud to support good causes - making payments of over £5.9m to charitable causes and campaigns in 2024.' The new rules mean farmers can pass on £1 million of agricultural assets tax-free, in addition to exemptions for all inheritances - a £325,000 tax-free allowance, plus a further £175,000 for a main residence. The Treasury argues this means most farmers can use all three and pass on £1.5 million of assets without tax - and if the farm is owned by a married couple, both are eligible for the exemptions. This would enable them to jointly pass on £3 million of assets. The Treasury says just 27 per cent of farms will be affected, but the NFU says the true figure, based on analysis of DEFRA figures, is 66 per cent. Critics have repeatedly warned that farming families who are asset-rich on paper will now not have enough money to cover the inheritance tax. The Treasury defended its approach to changing farmers' inheritance tax relief as 'fair and balanced'. Since its debut in 1970 Glastonbury has attracted thousands of eager music fans to support their favourite artists come rain or shine. The headline acts for the first year were Marc Bolan and Keith Christmas, with 1,500 guests getting in for £1, a ticket which included free milk from the farm. Festival-goers would camp wherever they found a spot for their humble tents.
Irish Times
6 days ago
- Business
- Irish Times
The D4 farmers: How the rich are buying up land to avoid inheritance tax
In west Cork , there has been an influx of rich Dublin buyers in the area of late. 'It is a notable trend,' local agent Maeve McCarthy, of Charles McCarthy Estate Agents in Skibbereen, says. But, rather than seek out a site with a view, or a beachfront holiday home, these buyers are coming with one purpose in mind – to reduce the inheritance tax their family will have to pay. 'High net worth families are purchasing agricultural land as a means of transferring wealth in a tax-efficient manner,' she says. It's the latest wheeze dreamt up by tax advisers to help rich families reduce tax bills when passing on assets to the next generation. READ MORE Availing of agricultural relief can mean a 90 per cent reduction in the taxable value of the asset. And not only that, but if the land is leased, subject to certain conditions, rental income can also be tax free. While the Government has become wise to the unforeseen use of the relief, more restrictive measures announced in last October's budget have yet to come into play. Non-farming families still have time to make use of the relief before the changes are legislated for. While restrictions might be warranted, long-time farmers are now struggling to make sense of the new regime and how it might hinder them from availing of the relief. Tax relief While inheritance tax thresholds apply for most Irish families, allowing assets worth up to €400,000 to be passed on tax free to each child, a different regime applies to the transfer of assets such as businesses and farms. These are attractive, as the goal is to keep the assets intact rather than forcing the recipients to sell off land – for example, to settle a tax bill. Through agricultural relief, the taxable value of such property and land can fall by as much as 90 per cent. [ Kinsale flotilla set to protest 23-hectare mussel farm Opens in new window ] 'It's a very important relief to have in place. Without that in place, tax-free thresholds wouldn't be sufficient [to keep farms intact],' says Kevin Connolly, financial management specialist with Teagasc . McCarthy agrees that 'it's a tax-efficient way of passing on the land', giving an example of a farmholding of 100 acres. With current values of about €20,000 an acre for good land in the area, this farm could be worth about €1 million. If it qualifies for agricultural relief, its taxable value would be as low as €100,000. Qualifying for the relief does require meeting certain tests. First of all, the beneficiary must be an active farmer and have farmed the land for at least six years at the date of the gift or inheritance. However, this requirement can be overcome by leasing out the land to an active farmer. Secondly, after the gift or inheritance is received by the beneficiary, at least 80 per cent of the total property value of their assets must constitute agricultural property. Relief on income tax from leasing a farm is also attractive. For example, for a lease held for between five and seven years, income of up to €18,000 a year will be exempt from income tax. This increases to €40,000 a year for leases of 15 years and more. Tax planning As McCarthy notes, while the relief is 'commendable', given its aim of helping farmers keep farms within families and allowing them to transfer from parent to child in a tax-efficient manner, its use is not always in the spirit of the relief. 'It's an unintended consequence of good intentions,' she says. 'It has been a concern over a good number of years,' agrees Connolly. 'Wealthy non-farmers would potentially see land as a way of passing on wealth to the next generation.' Tax advisory firm Warren and Partners, for example, states on its website that the 'relief can be utilised very efficiently as part of a wider inheritance tax planning exercise'. Figures from Revenue show that 1,781 taxpayers made a claim for Capital Acquisitions Tax (CAT) agricultural relief in 2023 (the latest figures available) at a cost to the exchequer of €246.6 million. This is up substantially – by 55 per cent on a value basis – from 2019 when 1,413 claims were made, at a value of €158.6 million. 'Having non-farmers coming in and buying land for wealth transfers doesn't do any favours for the farming community,' says Connolly. [ Scientists accuse Ireland of 'accounting trick' to justify livestock emissions Opens in new window ] It's one reason why land prices are increasing. 'They [high net worth individuals] are starting to have an impact on prices,' says McCarthy, noting that local and younger farmers are being priced out of the area. 'They [local farmers] will lease the land but will never end up owning it,' she says, adding that rental values have also increased substantially in the last 12 months. According to the 2025 Teagasc/Society of Chartered Surveyors Ireland Agricultural Land Market Review and Outlook Report, average land rental prices are expected to increase by 7 per cent in 2025. In Munster, average rental prices are expected to rise by 8 per cent. The role of investors is one reason cited for rising land values. While there is a risk in buying land for CAT reasons – will it appreciate in value, or can it be leased? – Connolly says demand for agricultural land is high, particularly in areas where dairying is quite strong. 'It's the most profitable enterprise at the moment,' says Connolly. 'If land comes up for long-term lease near a dairy farm, you will have interest in it.' Clampdown In last October's budget, then minister for finance Jack Chambers tightened eligibility for use of the regime to 'safeguard agricultural relief for the genuine active farmer and the next generation of farmers'. Noting that the relief 'is an important measure to allow our young people to pursue their lives on the family farm', the minister said 'agricultural land has increased in value above inflation, and it is difficult for genuine farmers to purchase the land they need for farming'. To address issues of the relief being used 'as part of tax planning strategies by wealthy individuals', Mr Chambers said he would extend the six-year active farmer test to the person who provides the gift or inheritance. This means that it's not just the person inheriting the land who will have to pass the active farmer's test, the person gifting it will have to too. The person gifting the land will now have to show that they either have an agricultural qualification and have farmed the property on a commercial basis; or they have spent 50 per cent of their normal working time farming; or they have leased the land to someone who fulfils these requirements; or they have combined farming with leasing. The change is expected to yield about €15 million on a full-year basis. The regime has been tightened previously: for example, cash gifts, used to purchase farm land within two years, would have qualified for relief at one time, but this no longer applies. Similarly, the lease exemption was tightened in the 2023 budget. You can no longer buy a farm and lease it immediately. You have to wait seven years before you can claim the tax-free income, although there are exemptions. However, the commencement order required for these changes to take effect has yet to be announced. Impact on farmers In the meantime, farmers are left struggling with the uncertainty that now surrounds the relief. 'What was proposed caught people unawares in the farming community,' says Connolly, adding that the budget measures are 'quite a blunt instrument'. 'There are some angles to it that would catch out a genuine farm transfer.' Marty Murphy, head of tax with Irish Fiscal Advisory Council (Ifac) , has counted 15 scenarios that could negatively impact farmers, including where life interests apply and where there is no formal lease. He gives the example of a farmer who also works as a schoolteacher, and thus doesn't meet the 20 hours a week farming requirement, and the tax bill that can arise. [ More than 20 Irish companies on Asian trade mission Opens in new window ] Another issue is where a farmer has to go into a nursing home at short notice and there isn't time to agree a lease. The farmer may not fulfil the requirement for six years' active farming immediately ahead of transfer. Farmers are now hoping the budget measures will be changed before they become law, to ensure their interests are protected. Murphy doesn't expect any change until this October's budget, but adds that rushing to get in ahead of any changes is not always practical. 'Succession is not something you can do over an afternoon coffee,' says Murphy. 'It's a very sensitive topic, and you need to have a very well co-ordinated plan.' Nonetheless, for those who have been planning to get a succession plan in motion, his advice is: 'Don't delay, get transferring as quick as possible.' The fear remains that, when introduced, the new regime will 'inadvertently catch genuine farm transfers in the net', says Connolly. A spokeswoman for the Department of Finance says consultation and engagement with farmers and stakeholders 'to ensure that there are no unintended consequences in relation to these measures' is ongoing. But will the changes still do what was originally planned? High net worth people have very good advisers – and very good advisers usually find ways around these things, says Connolly.
Times
6 days ago
- Business
- Times
Glastonbury founder could avoid £80m in inheritance tax
The owner of Glastonbury festival has transferred most of his financial interest in the event to his daughter and a family trust, potentially avoiding a huge inheritance tax bill. Sir Michael Eavis, 89, gave his entire shareholding in Glastonbury Festival Events Ltd, the operational company responsible for running the festival and selling tickets, to his daughter Emily, 45, in October. Last year the company sold 210,000 tickets to the event at about £300 each. Pre-tax profits doubled to nearly £6 million after revenues jumped 20 per cent to £68 million. At the same time, Eavis, who has long supported the Labour Party and in 2017 endorsed Jeremy Corbyn, describing him as 'the hero of the hour', also transferred three quarters of the shares he owns in the separate holding company, Glastonbury Festivals Limited, to a trust.
