Changing tax 'the only route' to sustainable farm tenancies

2019 saw one of the lowest average lengths of farm tenancy terms on record, at 3.21 years
2019 saw one of the lowest average lengths of farm tenancy terms on record, at 3.21 years

Making changes to the taxation framework is the only route to ensure sustainable and secure agricultural tenancies, according to the Tenant Farmers Association (TFA).

The group is lobbying for changes in the taxation framework within which farm tenancies operate to secure longer and more sustainable agreements.

Since the introduction of Farm Business Tenancies (FBTs) in 1995, term lengths have been short: year on year, average lengths have rarely been above four years.

2019 saw one of the lowest average lengths of term on record at 3.21 years, with 89% of all new farm tenancies offered for periods of five years or less.

The TFA said that longer term farm tenancies were needed to ensure the sustainability and resilience of farm businesses.

The group's chief executive, George Dunn explained that the market was failing to deliver sustainable solutions for farm tenancies.

"Short term FBTs stifle innovation, restrict sustainable investment and prevent good soil management," he added.

"It is driven by an overarching desire from those advising landlords to retain control and maximise flexibility to take advantage of changes in policy or alternative markets such as commercial or residential development.

"There is no incentive to think long term and no penalty for taking a short-term approach."

In advance of the March Budget, the TFA has written to Chancellor of the Exchequer Rishi Sunak to argue for numerous changes in taxation.

This includes restricting the 100% relief from Inheritance Tax - currently available to all landlords regardless of the length of time for which they are prepared to let land - to those prepared to let land for at least 10 years or more.

The TFA said the government should also clamp down on landowners using share farming, contract farming and share partnerships as 'thin veneers' of trading activity to gain tax advantage.