Best Of

On the basis that I want my Government to be competant even if I disagree with them on a lot of things, the Starmer reign so far really does worry me.

Three big tax policies have resulted from the Budget - Removing the Winter Fuel allowance (which I know was announced prior to the budget), Inheritence tax on family run businesses and farms, and increasing Employer's NI.

The first two of these are being done for explainable reasons (The state should not be giving money to those who don't need it just because they are old, and rich investors are using the IHT arrangments to avoid paying tax) but both have been completely ballsed up with their implementation - not the PR but the actual planned implementation.

It would have been easily possible to have devised a system to properly means test the WFA removal rather than using the blunt tool of Pension Credit and it was certainly possible to devise an IHT system that did not threaten the future of family farms and businesses whilst still closing the investment loophole. I just get the impression that, because they don't actually understand (or care?) about the collateral damage, they plough on with the most basic sledgehammer applications of their plans safe in the knowledge that they can always point to the intended target as an excuse. They are the Bomber Harris of politics.

(On the third policy of employers NI we have yet to see the effects of that but I suspect a lot of smaller businesses will be laying off staff or shutting down entirely and again there seems to be no effort to differentiate between larger companies and the small businesses which run on very low profit margins)

Meanwhile we still don't have an effective or fair tax regime for multinationals.

Torsten Bell
@TorstenBell
·
9h
Tax due if parents hand on £3m house: £940k
Tax due if parents hand on a £3m farm: £0
A reminder of significant tax advantage to farmers vs everyone else AFTER these changes

===

A real problem for Starmer's version of Labour is they don't understand emotion and its role in politics.

We had the same tin ear with making some pensioners freeze this winter.

They paraded all the numbers and talked about credits and schemes and council support and so on.

Have they learnt absolutely nothing from Trump? The Dems trotter the same arguments out: 'look the best economic numbers in years', 'inflation down to 2%', 'job rates at a high' etc etc.

Clarkson and Farage and co understand.

You also can't produce vast amounts of the nation's food from a house unlike farmland

Yup, this is what bothers me about this kind of analysis. Agricultural land and property aren't the same asset class, one is productive and the other is for rent-seeking.

The left are coming over as extremely "nasty" in their anti-farm comments.

Well, I'm not of the left, but I'm generally sceptical of giving any industry special treatment. And I'm especially sceptical when the special treatment is abused by other groups of people to avoid taxes.

Am I coming over as nasty?

I have no objection to farmers. They are carrying out economic activity, just like shoemakers, bakers, shopkeepers and insurance entrepreneurs.

But I also struggle to see why they should get special treatment.

Which is why I'd suggest replacing inheritance tax with a small annual gross assets levy. You can pass whatever you like onto your children, free of tax, but for people with assets of more than £1m, you need to make an annual payment 0.1% or 0.2% on the excess.

And this would be payable by anyone owning assets in the UK, not just by UK taxpayers. (I.e. tax the asset, not just resident taxpayers.)

It would probably raise almost exactly the same as IHT. It would avoid massive one-off payments. It wouldn't treat different family run businesses differently depending on the industry they were in.

And it wouldn't distort the market by allowing investment managers to buy up farmland solely for the purpose of avoiding IHT.

I think the difference is that farmers put food on our tables and often it's a pretty thankless andow margin industry. Isn't there a case to be made that having a proper food security reserve is worth a few tax breaks?