On Thursday 19 December, Prime Minister Keir Starmer was quizzed by the Liaison Committee – a supergroup of chairs of different parliamentary committees – with Liberal Democrat MP and chair of the Efra Committee Alistair Carmichael using his allotted time to solely focus on the changes to inheritance tax.
He began by asking the Prime Minister who the changes were targeted at: “Was it the super-rich sheltering wealth, was it the family farmers, or was it both?”
The Prime Minister said “the purpose was to raise revenue in the Budget, so it was not aimed at a particular group of individuals”.
He maintained that the vast majority of farms would be “unaffected”.
Mr Carmichael went on to ask if that meant the government no longer adheres to the original purpose of these reliefs, which was to ensure the succession of family farm from generation to generation.
The Office of Tax Simplification set out in its report on IHT in 2019: ‘It is generally understood that the main policy rationale for BPR and APR is to prevent the sale or break up of businesses or farms to finance Inheritance Tax payments following the death of the owner.’
Sir Keir said the government recognised the need to protect family farms and argued that the special measures (10-year, interest-free pay off period, reduction in IHT rate) ensured “a fair balance between raising the revenue and the protection we wanted to put in place”.
Crunching the numbers
Asked if HMRC’s figures, saying there were around 500 claims for APR, were a “robust figure of those who will be caught”, the Prime Minister reiterated that they were.
Mr Carmichael countered this by highlighting that this figure does not include estates where land would been passed on using BPR.
Sir Keir said: “I think that it does.”
Mr Carmichael made it clear that it does not.
“It’s clear from the Prime Minister’s words today that it is simply an indiscriminate revenue-raising measure with no thought given to who it impacts.”
NFU President Tom Bradshaw
When asked if the Chancellor would meet with the farming unions despite having refused to so far, the Prime Minister cited his recent meeting with NFU President Tom Bradshaw, adding that “the Chancellor will manage her own diary”.
Government broken with premise of IHT reliefs
Mr Carmichael made reference to the Efra Select Committee’s evidence session, in which NFU President Tom Bradshaw was visibly upset when describing the impact of the family farm tax on Britain’s farms.
The Prime Minister said “nobody is comfortable with that, but that is why I took the decision to have a meeting with the President of the NFU”, adding that he wanted to hear first-hand from Tom Bradshaw.
However, when asked by chair of the Liaison Committee, Dame Meg Hillier if this was with a view to making any changes, the Prime Minister said: “No. We have got the policy.”
NFU President Tom Bradshaw said: “Despite ministers previously claiming this was about punishing wealthy people avoiding tax, it’s clear from the Prime Minister’s words today that it is simply an indiscriminate revenue-raising measure with no thought given to who it impacts.
“What’s worse is that the government has clearly forgotten the reason agricultural inheritance tax reliefs were brought in in the first place – which was to ensure that farms would not be sold or broken up following the death of the owner and could continue to produce high quality British food through each generation.
“It’s clear that this government has entirely broken with that premise, and it will be farming, then its associated industries, and then consumers who will bear the impact.”
