Stuart

#FamilyFarmTax talking points - a helpful guide: 1. "It's only 500 farms". No, that's APR claims above £1m made in one year, 2021/22. Many more people than that are affected by the rules. The CLA estimated the total number is 70,000 farms. On the Government's own numbers it's about 16,000 (500 x one generation of 32 years). The true figure is that it's likely tens of thousands are affected. 2. "There's a £3m exemption". No, that only applies if both spouses are alive, they can split the farm between them, they amend their wills before dying, both they are their children are in stable marriages (or they are prepared to use complex trust structures). It will not be possible for all couples to achieve this. 3. "Family farms are protected". No, DEFRA says the average family farm is 217 acres. At £11,300/acre that's £2.45m. Together with equipment and a farmhouse, that's likely well over £3m which is the maximum level of the exemption. Farms well below that level are affected and will need to take steps to restructure the way they are organised or face inheritance tax bills when the older generation dies. 4. "How can your income be that low? The price of land must be high because of tax avoiders." The current 100% exemption for land and businesses have applied since 1992. The price of land didn't start to rise significantly until 2005, when the Single Farm Payment was introduced. Tax rules only have a minor affect on land value, which is driven by multiple factors including development, rollover relief, environmental needs, and that they're not making more of it 5. "This only affects the very wealthy and tax avoiders" At one end lifestyle buyers may well be within the £1m exemption per person, at the other the very wealthy can still plan by making gifts. The people who cannot avoid it are family farmers who need to retain access to the farm income. 6. "Wealthy farmers can just pay their fair share of tax" An average farm income is about 1%. Even if you pay over 10 years, the inheritance tax payments will often take all the income, and so part of the farm will need to be sold. This reduces efficiency and makes the farm less viable for the future. What have I missed?

@jcbaldry The issue around us is that the roads the cyclists use connect the clusters of numerous small settlements, and if you want to go anywhere you have to go through them all. You know, like normal rural life.

People need some common sense on these topics. In West Sussex the speed limits cover the villages which is where you want them. Who decided we should be making roads ‘less friendly’ to cars ? Bad enough that we have reams of 20mph zones in London in places where they aren’t needed at all.

When I started in my current job, my commute was under 2 hours a day. Over the last 10 years, that has increased to 2.5 - 3 hours every day. This change would increase it to 5 hours a day. It is total idiocy. thetimes.com/uk/transport/a…

@PKirkbright Yes, we do. But remuneration isn't allocated between partners until post year end.

@StuartMaggs You might want to have an accountant prepare regular analysis that is shared with all the partners. That’s how we did it.

This is awkward, because self employed people already pay tax during the year on account of money they haven’t earned yet. It’s just six-monthly rather than monthly. Hopefully the Exchequer Secretary will be all over this explanation.

@PKirkbright I know exactly how my business is doing. I don't know what I'm going to earn, because I have other partners who are doing amazing, impressive things.

@StuartMaggs I was travelling through an airport so missed the nonsense about not having “an inkling” about your profits by the end of January. If you don’t then you probably shouldn’t be in business.

Yup, 10 months after the start, but 2 months before the end of the tax year. As a result you don't know how much you've earned. So, for example, if you're in a partnership where profits are allocated after year end, then when you make your first payment on account you are doing so potentially without any inkling of what you're actually going to earn in the year because accounts haven't been done and profits haven't been allocated yet. Or if you have significant expenditure in those last 2 months that triggers a loss, then your taxable profit could be a great deal less than the amount you earned in the previous year, but you don't know yet because you haven't spent the money.

@StuartMaggs This is awkward because the first payment on account for the 2026-27tax year occurs on 31/01/27 almost TEN MONTHS after the start of the tax year. “Private client law and tax” 🤣 God help them.

@GravyTrainBrit Thanks for the advice. I think I've got this.

@StuartMaggs Not sure you understand the current system Stuart. Google or AI it !

Think of it from the parents’ perspective. You’ve spent your life scrimping and saving and have accrued some money to leave to your children. You make a gift in lifetime, but unfortunately die a couple of years later. The taxman goes back to your kids and demands their share of that gift from your kids (who hopefully haven’t spent it), as well as 40% of everything else you own. A lot of people think inheritance tax is wrong.

@StuartMaggs I will never understand this mind set. If when my parent die (hopefully won't be for decades) and they leave me £1000,000 and the government takes 50% why would I be upset? I'm still getting £500k. If they left me £10k and I got £5k I will still be happy that I got the £5k.

Currently, about 1 in 10 families pay inheritance tax when their parents die. By 2030, that's likely to rise to about 1 in 5. IHT is the most hated tax not because children don't inherit all their parents' money, but because parents feel the State is taking their legacy from them, their life's work, the culmination of all of their efforts. It's reviled because people know that at the end of their life the taxman will be there to take his generous slice of everything they've scrimped and saved for over decades, potentially destroying the family business, breaking up the family farm, or forcing the family home to be sold. It's hated because while the State treats everyone as individuals, people think of themselves as families. Piercing the family wrapper to take a huge slice of their savings really, really annoys people. Putting an extra 10% on inheritance tax as a care levy will see a huge behavioural response. "Half" is a much more visceral amount than 40%, and will disproportionately spur people not currently thinking about tax planning to invest the time and money to reduce the charge. I saw this when the highest rate of income tax went up to 50%, and a number of clients just stopped working extra hours. Whatever they do with IHT, the Treasury will have to take this into account.

@bruceebabe Your well reasoned rebuttal has defeated me. Congratulations.

@StuartMaggs No they are not

@MDC12345678 This isn't just any energy, this is British energy.

If you want luxuriously expensive, insecure energy, then Labour and the Liberal Democrats are there waiting for you...

@DanW400 @NealMilne "Texas has dethroned California as the state with the most Fortune 500 companies." latimes.com/business/story…

@NealMilne @StuartMaggs Exactly. California is home of innovation and they have the highest tax rates in the US.

Imagine two countries starting from where we are. In one, IHT goes up to 50% along with the top rate of income tax, CGT goes up to the same rate and to stop capital flight they impose an exit tax so people are trapped in the UK tax net. In another, IHT goes down by 10%, CGT for entrepreneurs is put back to 10% and extended up to £10m of relief again. Which of these two countries would you want to build a business in? Which of them is more likely to flourish from domestic and international investment? Which of them is attractive to the most exciting, innovative and inspiring of our youth? If you have to trap people in your country to tax them, you’re probably doing it wrong.

@bruceebabe 1. My Tweet says families, not estates. 2. Your figures are about 4 years out of date. 3. Yes it is. thisismoney.co.uk/money/saving/a…

@StuartMaggs Your figures are incorrect, 4.62% of estates liable to IHT in the UK. Why do you lie? Not the most hated tax when so few people pay it.

@HiddenYorkshire Dammit, I was looking forward to that read.

I got a B in A-Level Classics and this is everything you need to know about The Odyssey 🧵1/362

@LondonTommy66 They could be saying "the Government should not be using taxpayer's money to pay that bill, they should change things so it isn't payable." Ever higher taxes are not inevitable, they're a choice.

@StuartMaggs The person who complains about IHT as unfair is only saying, someone else needs to be paying this bill for me.

@boatlady Sorry, it was an attempt at a rhetorical question. One family. It's sounding as if we mostly agree to within a percentage point or two.

@StuartMaggs She certainly didn't count me as family, that's why I didn't inherit. But I was asking how you calculate the number of families affected? My children all have their own families now, so do you count them as 1 family, my mother's heirs or 3 families in their own right.

@boatlady Did your mother think she had three families? Or are you all one family?

@StuartMaggs Not that my mothers estae attracts inheritance tax, because her heir are my three children and it falls below the threshold, do you count that as 3 families affected?

“If your back is against the wall, call a farmer…. They get s**t done.” Thank goodness we have farmers, not just for food but for our rural communities, emergencies and safety. Thank you farmers across the country 🙏 facebook.com/share/p/19JnZ6…

@boatlady You're free to disagree. Your figure is 5.3% and you need to sort of nearly double it to get from the number of individual estates to the number of families affected, bearing in mind the demographics of the people dying. Which is probably 8-9%? Or about 1 in 10. Ish.

@StuartMaggs I disagree with your reasonable estimate. 600,000 deaths annually, 32,000 estates paying inheritance tax.

📢 new blog post 🤓 Some thoughts on what a Burnham premiership might look like ✍️🤔 (Among other risks, talk of a blockbuster tax-borrow-and-spend Budget in the Autumn threatens a repeat of the speculation that was so harmful under Rachel Reeves...) julianhjessop.substack.com/p/another-lurc…