Steve Reed has publicly come out to say the Budget will allow more land to be used for agriculture, despite backlash from rural communities.

Tom Gauterin, director at national law firm, Freeths, has reacted to this news

“Mr Reed’s comments to the Lords’ Environment and Climate Change Committee suggest, concerningly, that the Government has still failed to understand the problem and has no intention of backing down. It also suggests that there is a fundamental misunderstanding of APR itself – even when bought by wealthy investors, land does not qualify for relief if taken out of agricultural use.
 
“Nobody objects to the Government’s plan to target investors buying up agricultural land as a tax shelter. The proposed solution, however, is a very blunt approach that spreads the net far more widely, with the likely result of causing genuine hardship to farmers working on even quite large farms.
 
“Rather than imposing IHT on farms based purely on value (which fails to take account of the very low profit margins farms make even on farms with a large capital value, which stand no chance of covering an IHT bill), there are other options open to the Government which, so far, it has shown no willingness to explore.
 
These include:
 
•    Limiting the availability of APR for landlords
•    Tightening the definition of ‘working farmer’
•    Using a clawback mechanism.
 
“This third option seems the most suitable and has been suggested by several industry commentators over the years. The details would need scrutiny, but basically would provide an exemption from IHT for farms on death, to be clawed back if the farm (or part of it) was sold within a period of time  - ten years, perhaps, with a taper down over time. This would immediately prevent the absurdity of farmland being used as a tax shelter and sold shortly after the owner’s death. It also has the advantage of being a mechanism used elsewhere in tax law, so would be familiar to practitioners and easy to draft.
 
“It is concerning that the Government so far appears to be sticking to its guns despite numerous suggestions that might more effectively achieve the policy’s aims. It would be an encouraging sign if the Government agreed to a genuine consultation before ploughing on with an approach that is likely to be both unpopular and unsuccessful.”