Death, taxes and Brexit – and a happy new year! -farming comment
Whatever your views on the last-minute trade deal with the EU agreed just before Christmas – and the devil will lie in the 1200 pages of detail – its conclusion must remove at least some of the uncertainties which have hung over the farming industry for the past four and a half years.
But even in the most desperate attempt to put an upbeat spin on the start to the New Year, I wouldn’t go as far as suggest that things will be plain sailing from now on in.
For, while some of the uncertainty might have been banished, the old adage that the only certainties in life are death and taxes still holds true – and any effervescent optimism, no matter how well intentioned, has to be tempered, especially with the current resurgence of the Covid virus.
I say this because, sadly, it looks like the pandemic will continue to play a significant role on both the aforementioned fronts in the coming months and years.
With no desire to repeat the grim statistics which are meted out on a daily basis, it’s got to be pretty obvious to anyone that the economic punishment which the country suffered over the course of 2020 won’t magically disappear now that the calendar has tripped over to 2021.
With hundreds of millions being borrowed by the Government to shore up the economy, you can bet your bottom dollar that the back-room boys of the Treasury department will be leaving no stone unturned in their search for the means of recouping some of the spondulix which continues to haemorrhage from their coffers.
And this fact shouldn’t be missed by the farming sector because, albeit inadvertently, we might just find ourselves standing towards the front of the fiscal firing line.
The high capital/low returns nature of the industry makes us curiously exposed as targets in the increasing clamour for tax changes which, while they might have been circulating for years, could gain more traction in these hard-pressed times.
Proposals for a one-off wealth tax, the removal of Agricultural Property Relief from death duties and even the creation of a land value tax are only some of the many ideas floated recently which would have major repercussions for the farming sector.
The one-off wealth tax on all the capital and property held by individuals was suggested as a straightforward way of helping the country get back on its feet. And while the idea might have the major benefit of simplicity on its side, with land prices appearing to be holding, even a modest farm would be likely to run up the sort of bill which could cripple a business for years to come.
For while the super-rich would no doubt be able to afford the sort of accountancy firms who can exploit sufficient loopholes to get them off Scot-free, I doubt if many who rely purely on their farming enterprises for income would find themselves able to afford such advice.
And it’s probably those very same accountants who have led to the threat to Agricultural Property Relief (APR) – an exemption which was introduced to allow working farms to be passed between generations without incurring the sort of tax bill which would finish off most agricultural businesses.
For the measure has been adopted by the super-rich as a means of passing on fortunes often made in very different spheres to the next generation without incurring huge tax bills.
And, paradoxically, the self-same individuals have probably played a significant role in maintaining the price of land at a level which is almost exponentially beyond its agricultural earning capacity.
And while parliamentary reports into the issue suggested that limiting APR to working farmers could solve the issue, it noted that legally defining a working farmer was “challenging”.
More recently the notion of a Land Value Tax is under investigation by the Scottish Land Commission (SLC), which has recognised that land ownership is currently exempt from rates – and they’ve been taking a close look at how such a tax has been used in other countries around the world not only to raise funds but also to help break up the sort of concentrated land ownership which they believe Scotland has.
So while death and taxes might be the only certainties – we’re still left guessing as to just how they might be delivered.
Now there’s a cheery thought to start the year…