Spring budget must bring land into 'better balance', growers say

Sajid Javid has been urged to use the upcoming spring budget to bring the farmland market into 'better balance'.

The Tenant Farmers' Association (TFA) says a combination of overheated land prices and short-term rental agreements is 'preventing sustainable routes' for new entrants.

The group is now urging the Chancellor of the Exchequer to provide a 'sound platform for a progressive farming industry' post Brexit.

Mr Javid is expected to unveil his hotly-anticipated first budget on 11 March.

TFA chief executive, George Dunn, said: “We have known for some time that an extremely benign taxation framework surrounding agricultural land has fuelled the rise in land prices.

“At the same time, there is no incentive to encourage landlords to offer long-term farm tenancies.

“Almost half the current value of farmland has been added over the past 10 years, whilst the average length of term on farm business tenancies has been around four years or less”.

The TFA says successive Chancellors have 'shied away' from using their fiscal levers to influence the market in agricultural land to encourage more long-term thinking.

“We hope that in the context of building a successful agricultural industry post Brexit, that Chancellor Javid will take a different approach when he delivers his budget, expected next month,” Mr Dunn added.

The group's proposals for tax changes include the abolition of Capital Gains Tax rollover relief involving land purchases except where a capital gain has been made as a result of compulsory purchase.

It calls for the government to restrict the 100% Agricultural Property Relief from Inheritance Tax, which is currently available to all landlords regardless of the length of time for which they are prepared to let land.

It wants to see this restricted only to those prepared to let for 10 years or more.

Other tax change proposals

• Allowing landlords letting land for 10 years or more to declare their income as if it was trading income for taxation purposes for the duration of the tenancy.

• Clamping down on landowners using share farming, contract farming, share partnerships and grazing licences as veneers of trading activity for tax advantage.

• Reforming Stamp Duty Land Tax to end discrimination against longer tenancies.

Source: Farming UK