THE Scottish Government has said it is “profoundly concerned” about Labour’s tax raid on farms.
Chancellor Rachel Reeves last week unveiled plans to close a loophole that exempted farmers from inheritance tax on agricultural land worth more than £1 million.
Farmers have sounded the alarm over the change to agricultural property relief, which previously meant that farms could be passed down with no inheritance tax due.
Now, farmers will need to pay tax on half of the value of their farms worth more than £1m. The UK Government expects this to affect very few farms, saying that just 500 will be affected in 2026 to 2027.
In a statement issued after a meeting of First Minister John Swinney’s Cabinet in Ayr on Monday, the Scottish Government joined the chorus of criticism directed at Labour over the policy.
It said: “The Scottish Government is also profoundly concerned about changes to inheritance tax for farmers, as well as the funding formula used to support farmers which could disproportionately impact Scotland given its relative land mass.”
The billionaire investor James Dyson (above) said Labour’s changes meant the “very fabric of our economy is being ripped apart”.
Writing in The Times, he said: “Every business expects to pay tax, but for Labour to kill off homegrown family businesses is a tragedy.”
Dyson is a major landowner and his business, Dyson Farming, produces crops on 36,000 acres across the UK.
The entrepreneur and his family have a fortune of about £20.8 billion, according to the latest Sunday Times Rich List.
The National Union of Farmers Scotland has said that Labour’s tax raid would “generate only marginal benefits in filling a financial black hole” while creating “huge difficulties” for some farmers.
It added: “Decisions to reinvest in these farming businesses will be shelved and the knock-on ramifications for the wider rural economy, and businesses up and downstream will be significant.”
Together with business property relief, the farm loophole cost the UK Government £4.42bn in the tax year 2021 to 2022, according to Treasury documents.
