First Minister John Swinney has expressed concerns about recent inheritance tax reforms and their potential impact on Scottish farmers.
Speaking ahead of his address at the AgriScot conference in Edinburgh, Swinney commented on the changes introduced in the Chancellor’s Autumn Budget.
The reforms, which introduce a 20% tax on agricultural assets valued over £1 million, have reportedly caused concern within the farming community.
Swinney suggested that these changes may be leading to increased stress among farmers.
“The Chancellor’s decision to reform exemptions to agricultural property relief for inheritance tax has led to unacceptable levels of stress, worry and uncertainty amongst farmers in Scotland.” Swinney stated.
He has called on the UK Government to publish impact assessments of these proposals on Scottish farmers and crofters.
Swinney also addressed the issue of future financial support for the sector. He emphasised the need for clarity, noting that altering the link between land area farmed and funding could potentially affect Scotland’s efforts to modernise its farming industry.
The UK Government has defended its position, stating that the reforms are balanced. They highlight that farm-owning couples can still pass on up to £3 million without incurring inheritance tax.
However, Swinney and some members of the Scottish farming community appear to remain unconvinced by this assurance.
Swinney said: “The UK Budget could scarcely have been more indifferent to the needs of rural communities and the rural economy, on top of a lack of certainty over long-term funding, which we would have through membership of the EU, meaning we now have an inadequate settlement.
“I know this is already having a chilling effect on farming and rural businesses. The UK Government must urgently commit to undertake and publish impact assessments on its budget proposals on farmers and crofters in Scotland.
“Fundamentally, the Scottish Government wants to see a tax system that supports rather than hinders orderly succession planning and the transfer of land to the next generation of custodians.
“No matter whether or not a significant number of businesses are affected directly, it is deeply disappointing that the Chancellor chose not to work with the Scottish Government before acting on this sensitive matter.
“The UK Government must also provide clarity on the future of financial support for the sector, after confirming in the Autumn Budget that agricultural funding will be baselined.
“Any move to break the link between land area farmed and funding increases in Scotland ignores our ongoing commitment to active farming and food production, and could constrain our efforts to transform our industry for the future.”
The debate surrounding these reforms underscores the complex relationship between taxation policies and their effects on specific sectors of the economy, particularly in the context of devolved administrations within the UK.
