John Swinney warns inheritance tax reforms having ‘chilling effect’ on Scottish farming

Inheritance tax reforms have been causing concern among farmers in Scotland, with First Minister John Swinney warning of a “chilling effect” on the farming and rural businesses in the region. Swinney raised this issue ahead of his address at the AgriScot conference in Edinburgh, expressing his disappointment over the changes introduced in the Chancellor’s Autumn Budget. The reforms involve removing some inheritance tax relief from farms, with the tax now being charged at 20% on agricultural assets above £1 million.

Swinney highlighted the stress and uncertainty these changes are causing among farmers and called on the UK Government to conduct and publish impact assessments on the proposals’ effects on farmers and crofters in Scotland. He also emphasized the need for clarity on the future of financial support for the sector, expressing concerns about potential constraints on industry transformation in light of the changes.

The Scottish Government aims to support orderly succession planning and land transfer to the next generation, but Swinney criticised the lack of consultation with the Scottish Government before implementing these changes. He stressed the importance of a tax system that facilitates such transitions and expressed disappointment with the current approach.

In response, a UK Government spokesperson defended the reforms, stating that they aim to ensure fiscal sustainability and a fair approach, allowing farm-owning couples to pass on up to £3 million without paying any inheritance tax. The spokesperson highlighted the need to address fiscal challenges and ensure a balanced approach.

Ultimately, the concerns raised by Swinney reflect the broader implications of tax reforms on rural communities and the agricultural sector in Scotland. The call for impact assessments and clarity on financial support underscores the importance of understanding and addressing the challenges facing farmers and rural businesses in the region.