The NFU are specifically mentioned in the report (on page 86) as being involved with negotiations on a farmers’ pack setting out common helpful approaches to farm issues.
The NFU will continue to analyse the whole report and particularly welcome some of the Select Committee’s findings on tax.
Two of NFU’s key petition points on taxation were recognised in the report:
Capital Gains Tax: NFU’s concerns are that members whose land is acquired compulsorily may be liable for a large capital gains tax bill if they can’t reinvest proceeds in land, premises or other assets within the normal ‘business asset roll over relief periods. NFU petitioned for an exemption with a fall-back position of an extension to the statutory time limits for rollover relief.
Inheritance Tax: NFU sought to highlight the potential risk of losing Inheritance Tax relief where assets are taken under compulsory purchase and where the owner dies before they have been able to replace those assets. We suggested that where the farmer has taken reasonable steps to replace the asset (albeit without success) at the time of death, then the farmer’s estate should be excused having to pay IHT in respect of the compensation payment. HMRC have sought to suggest that the discretionary powers they possess are sufficient since they allow them by discretion to extend the capital gains tax rollover relief time limits and where cash is earmarked for reinvestment to allow Inheritance tax relief. However we think this is insufficient certainty for our members.
The Committee report states on page 85 that; “We wished for greater certainty and clarity. There is precedent for extended discretion in cases from other business sectors. The Treasury should make it clear that the enhanced rollover relief periods will apply to all those whose land is acquired for the project. As it will take HS2 some ten years to bring its Phase One rail project to fruition, there is a case for allowing farmers a comparable period for reinvestment.”