Orkney and Shetland MP Alistair Carmichael has expressed concerns on behalf of farmers and crofters regarding the potential effects of proposed changes to Business Property Relief (BPR) and Agricultural Property Relief (APR) in relation to inheritance tax, which are reportedly being considered for the upcoming Budget.

In a parliamentary debate led by Harriet Cross, MP for Gordon and Buchan, Carmichael raised issues highlighted by the Tenant Farmers’ Association (TFA).

While acknowledging that ‘there might be a case for reform’, he warned that any changes impacting farming could have significant repercussions for rural communities.

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Carmichael stated during the debate: “We have had a lot of speculation in the media in recent weeks about the possibility of changes coming in the Budget very soon.

“Without the ability to have a proper debate involving the treasury, change will inevitably come in a haphazard and chaotic way, and it will bring with it many unintended consequences that will have an effect on not just farmers but the wider rural community.

“There may be a case for reform, but this really is not the way to go about it. Farming is a capital-rich and revenue-poor industry.

“What affects farmers will affect vets, agricultural merchants, local shops and post offices in some of the most economically fragile communities to be found anywhere in the country.” he added.

Carmichael emphasised that farming plays a critical role in supporting rural communities and economies, both environmentally through land management practices and financially.

The TFA had provided a briefing for the debate, expressing that its members are already feeling the impact of inheritance tax concerns.

The briefing noted: “We are already seeing, first hand, concerns about how Inheritance Tax charges change the way that traditional estates have thought about the management of their agricultural land, and that is before there is any change to the Inheritance Tax regime.

“Rural estates with significant residential and mineral interests will want to ensure that they have sufficient business activity elsewhere on their estates to be able to qualify for BPR [Business Property Relief] from Inheritance Tax across the whole of their estates.

“If APR [Agricultural Property Relief] was abolished, this will make things hugely much more difficult for farm tenants.”

The association also pointed out that many larger estates have moved away from the secure agricultural tenancies that were once a hallmark, replacing them with ‘a much less secure system of tenure’.

MP Carmichael continued: “As the TFA says, there might be a case for reform. It suggests ways to reward longer tenancies of 10+ years and more secure tenancies.

“We have to have that debate, but we cannot effect that in a meaningful way that looks at agricultural spending in the round once the decision has been announced in a Budget.

“I hope that when the chancellor delivers the Budget next week, if this issue is under the Treasury’s active consideration, we will see the government’s direction of travel and the overall picture that they want to achieve, rather than just one quick hit, because that could have serious consequences for family farms and rural communities across the country.”