The ‘Tractor Tax’ & Reaction
On Tuesday, November 19th, British farmers gathered en masse in the English capital to protest the so-called ‘tractor tax’ included in the recent budget, delivered by Chancellor Rachel Reeves on October 30th. The budget, Labour’s first in 14 years, also included headline announcements such as an increase in capital gains tax, an increase in the ‘National Living Wage’, and increased funding for the National Health Service (NHS). None of these measures, however, have garnered as much attention as the ‘tractor tax’, which has drawn both praise and scrutiny. The proposal, which is scheduled to come into force from 2026, removes the existing exemption on inheritance tax enjoyed by owners of farms and rural estates worth over £1,000,000 (€1,200,000), whilst maintaining a 50% rate of relief for those patches of land, with affected farms having to pay 20% in the future, rather than the typical 40% that is paid on regular assets. The tax will also be payable in instalments spread out over 10 years, alleviating some of the burden on the owners of the farms in question. Prior to the ‘tractor tax’, families that inherited large plots of land did not have to pay taxes on the inheritance, which created a ‘loophole’ whereby wealthy individuals could buy properties and pass them down to future generations without generating any tax burden on the assets. Along with wealthy individuals, the proposal could also affect some owners of large farms, which tend to be family-owned – the Country Land and Business Association (CLA) estimated that the relief cap “could harm 70,000 UK farms, damaging family businesses and destabilising food security”, and described the “decision to now rip the rug from under farmers” as “nothing short of a betrayal.”. These figures have been highly contested, with the aforementioned Chancellor Reeves stating that only “around 520 estates a year (…) will be impacted to some extent”, and the Environment Secretary Steve Reed assuring that “three-quarters of farmers will pay nothing as a result of the changes”.
(The Independent) Jeremy Clarkson, popular English television presenter and newly-turned farmer has emerged as a leader of the ‘tractor tax’ protests
Budget Backlash
Despite the government’s attempts at reassurance, they have already faced sharp rebukes from farmers, who made their discontent known in Westminster on November 19th. Among these figures has been television presenter Jeremy Clarkson, best known for his role as co-host of Top Gear and, latterly, The Grand Tour. More recently, however, he has enjoyed immense success on the series Clarkson’s Farm, which documents the trials and tribulations faced by Clarkson while running a thousand-acre farm in Shropshire, England, which he assumed full control over in 2019. Clarkson has been credited with bringing attention to some of the biggest issues facing British farmers in recent years, and as such, it is little surprise that he has been so vocal in recent weeks. Incidentally, it was Clarkson himself, back in 2010, who extolled the virtues of the full tax exemption, saying that “land is a better investment than any bank can offer” because “the government doesn’t get any of my money when I die”, in 2021 calling it “the critical thing” in his decision to purchase the farm. Clarkson has since u-turned on this statement, saying he “just thought it would be a better PR story”, but he has nonetheless emerged as one of the most vocal critics of the ‘tractor tax’. Along with Clarkson at the protests was English composer Andrew Lloyd Webber – best known for The Phantom of the Opera, Jesus Christ Superstar, and Cats. Webber, who himself owns 5,000 acres of land, spouted unsourced claims that British farmland will “all be bought by foreigners” once domestic farmers can no longer afford it, adding that “Many, many, many people are hovering around (the land) at the moment, rubbing their hands in glee”. It was estimated by the Metropolitan Police that roughly 13,000 people had gathered in London, bracing heavy rain and low temperatures to voice their opposition to the proposal. No arrests were made at the peaceful demonstrations, although the Metropolitan Police said they were investigating drivers of tractors who ploughed through ‘no entry’ barriers during the protests.
(Reuters) A tractor displays the Union Jack as it makes its way through the English capital
The Tax’s Future
Despite the opposition that has been demonstrated, the government seems set on sticking with the ‘tractor tax’, with the aforementioned Environment Secretary Steve Reed saying that it is “hard to be sorry for trying to make the country’s economy work”, highlighting the importance of raising taxes to bolster public spending in the long-run. The Prime Minister, Keir Starmer, has also doubled down on the measures, stating that the “£5bn in the Budget” to be invested in the agricultural industry over the next two years is “not to be overlooked”, adding that he was “absolutely confident the vast majority of farms and farmers will not be affected”. Within the ruling party, however, the proposal has been met with mixed reaction, with Labour Peer Baroness Mallalieu denouncing the ‘tractor tax’ as having the “smell of incompetence”, and that a “large part of our (Labour) party has become urban… divorced from a big section of the community“. While the Labour Party has taken an outwardly hard-line stance in favour of the tax, they held a meeting at #10 Downing Street with the National Farmers Union (NFU), after which it was claimed by the union’s boss, Tom Bradshaw, that there was a “more conciliatory tone” toward the measure on the part of Labour, suggesting that amendments could be made to the proposal in the near future.
Featured image: (The New York Times) Tractors in Westminster, London, during the recent protests.
