Tenant farmers are 'bitterly disappointed' that the Chancellor has shut down the idea of restricting Agricultural Property Relief from Inheritance Tax only to those landlords prepared to let on a long-term basis.
Before the Spring Budget, the Tenant Farmers Association (TFA) had argued for a change in tax rules under which rural landlords make decisions about letting land to encourage longer term and more secure Farm Business Tenancies (FBTs).
Those changes would have enhanced the ability of the tenanted farming sector to meet the challenges of achieving productivity growth while boosting environmental outcomes, the body said.
But it warned that achieving those goals would be a huge challenge when the average length of an FBT, covering half the tenanted land in England and Wales, is only three years.
To change that dynamic, the TFA had argued that landlords, who now have unrestricted access to Agricultural Property Relief on any land that they let, should only have access to inheritance tax relief if they let for more than 10 years.
However, the report of the Rock Review into agricultural tenancies argued that the bar should be set slightly lower, at 8 years.
TFA chief executive, George Dunn, said the decision made by the Chancellor during the Spring Budget on 5 March showed "a disappointing disregard for the true needs of the tenanted sector of agriculture".
“Whether the bar was set at 8 years or 10 years, restricting agricultural property relief from inheritance tax would have been the right thing to do," Mr Dunn said.
"What is the public benefit of that massive state support to the landlord sector if it continues to offer such restricted security of tenure?
“Everyone agrees that longer term tenancies provide the best basis for funding investment, delivering productivity gains and securing environmental objectives."
He added: “Sadly, a coalition of organisations with a vested interest in maintaining the maximum degree of flexibility in bringing land to the marketplace have managed to persuade the Treasury to keep the status quo."
