DENBIGHSHIRE Council is calling on the Prime Minister and Chancellor of the Exchequer to reconsider and reverse their decision on the new inheritance tax threshold for farms.
A row broke out during a meeting at the council’s Ruthin County Hall HQ this week when a motion was put on the table to write to the UK Government.
Cllr Hugh Evans put forward the motion stating that the new inheritance tax threshold for farms would have a detrimental impact on farmers, their families, and the next generation of young farmers.
But Labour leader Cllr Jason McLellan defended the tax on behalf of his party, leading to one rural member passionately criticising Cllr McLellan.
From April next year, farmers who inherit agricultural land or assets worth £1m or more must pay 20% inheritance tax when they did not before, with certain exemptions and variations in place.
For instance, a couple could pass on a farm worth up to £3m.
Introducing the motion, Cllr Evans said: “Having spoken to many farmers, in my ward, locally, and nationally, I’ve seen and heard first-hand the terrible consequences the implications of the inheritance tax will have on some families, and it is clear to me now that the significant impact of this will have on the industry, the wider economy, and our rural areas.
“I have no problem paying tax. We all have to pay tax, legal responsibility, but it just has to be fair and fairer, and it just has to be more linked to income and profit. You’ll all have seen the demonstrations in London.
“The only benefit of the statement of the chancellor has brought is that it has united the industry, and those strong feelings out there.”
He added: “The value of (farm) land does not correspond to the income it generates, and that is really important.
“The value of land has gone up an awful lot and is only worth a lot when you sell it, but it does not generate the income required to pay this tax.
“The average income for beef and sheep farms in Wales is £22,000-£23,000. That is not in the high tax profit.
“In terms of the proposed tax liability, some farmers will not have the funds to pay the tax. Many will have to sell land, and they will then face the slippery slope of going out of business.
“Is that really a good start for the next generation in the farming industry, that they are landed a liability before they start their careers?
“There is total disagreement between the treasury and our unions in terms of how many farms this will impact.
“The treasury says it’s 500 large estates.
“All unions and the CLA (Country Land and Business Association) estimate that the impact will be between 50 and 75% of farmers who will have to deal with this issue.”
Cllr Evans went on to claim one in 25 farmers had stopped farming in the last 12 months.
He also claimed an independent study had consulted with 4,000 farmers, and that study indicated 50% of family farms had stopped investing in their land, with 43% planning on also doing so in 2026.
Cllr Evans said the implications extended to affect the food production industry as a whole.
Labour leader Cllr Jason McLellan, though, attempted to explain the new inheritance tax threshold after stating that farming was important both in Denbighshire and nationally.
“If any of us are lucky enough to inherit (property), the threshold is much, much lower,” he said.
“This is (applies to farming) estates over £1m, and more often than not with two people owning a farm, as husband and wife, the threshold will be £3m. The payment is also much lower.
“If we (residents) are lucky enough to inherit, we pay 40% (those estates over £325,000). This is 20%, much, much lower.
“The spousal exemptions apply; the usual exemptions with inheritance tax apply, the seven-year tapering relief as well, and those who inherit can pay off the inheritance tax bill over a period of 10 years interest free.”
He added: “The majority of farms won’t be affected.
“There are exemptions. The budget also provides £5 billion in aid as well to the farming industry.”
Cllr McLellan added: “When you are voting, can I ask you please to think of a small slice of those hundreds of millions of pounds (of potential money raised), the cuts that we could avoid if we had a small slice of that.
“The controversy we’ve had, rightly so – none of us came into politics to close libraries and toilets – but if we had a small slice of that, it would save many of our public services.”
Cllr Eryl Williams said he had worked in farming all his life and branded both the leader and the Labour party “arrogant” after suggesting farms in Wales were worse off than those across the border.
“Family farms in Wales are the backbone of the rural area,” he said.
“And not just that, they support small industries, and I find it arrogant for Jason (Leader Cllr Jason McLellan) to come in here and defend the Labour Party and their budget allocation, arrogant beyond belief.
“Because they came in; they did these two massive budget transformations, getting rid of fuel poverty and introducing this inheritance tax, with no consultation on anything, something that the arrogance of a political party did without looking at the welfare, and no assessment was done on either of them.
“And it shows how bloody-minded some people can be, instead of thinking of how it affects the community in general.”
The council voted 26-12 in favour of writing to the UK Government, asking that the Prime Minister and Chancellor of the Exchequer reconsider the new inheritance tax threshold and hold a full consultation.
