Land Tax? Dead Expensive

On inheritance tax for farms.

If I die and leave my 11 year old farm truck in my will for my children (spoiled, I know), it will be valued at a fair market value and taxed accordingly. 

And what’s a fair market value? Well, it’s a decent truck, does it’s job, an expected amount of scratches, high mileage and a faint odour of cattle. A few thousand pounds, perhaps.

Now let’s say I owned a farm and were to leave my farm in my will for my children. Once again, valued at market value and taxed accordingly.

Ok, so what’s a fair market value for my hypothetical farm? Well, we’ve got fields, hedges, some fences and a couple of rickety barns. It just about turns a profit every year but couldn’t support our family without other income.

Shall we say, £200,000?

Wrong.

This farm, I failed to mention, sits just on the outskirts of an already expanding town in southern England. Not far from the M25, in fact. Isn’t that handy.

So in reality, we can add a zero, maybe even two: at least £2,000,000.

And consequently, my tax bill (or rather, my children’s) is multiplied to a figure that the farm itself may never financially return in their lifetime.

We’re not taxing real-life, we’re taxing potential. Potential for development; into houses, retail etc. If the tax man called my farm truck a ferrari, I’d tell him where to go.