By Jack Bosworth, Director, FJ Bosworth & Sons. Published 10 November 2024.
I hope everyone is well.
Plenty has been going on at the farm over the last month, but the dominant subject around the table is, of course, the impact of the Budget. I view what this Government has decided to put in front of us, and in front of nearly all other family farming businesses, as a mountain to climb that is completely off the scale. It does not compare to other challenges within the industry.
What I am actually talking about
I am specifically talking about the changes to Agricultural Property Relief (APR) and Business Property Relief (BPR).
There were other announcements in the Budget that affect our business:
- The employer National Insurance increase.
- The increase to the National Living Wage.
I am confident we will adapt to cope with those. They will increase overheads, but they are manageable.
APR and BPR are different. The impact of those changes could break our family farming business, with a knock-on effect not just on us but on our staff, our suppliers and our customers.
How I felt watching it, and how I feel now
My feelings watching the Budget were of anger, betrayal and disgust.
Having had more time to reflect, and after attending a few talks that have followed the announcements, my feelings have not changed.
To be clear about what is and is not my objection: we have a positive attitude towards sustained growth in all areas of the business, and we continue to pay our fair share of tax along the way. That is fine. We all know it has to be done, and we all know that the more successful you are, the more tax you pay. That can be justified. You know it is coming, and everyone is a winner.
None of that is a reason, in my mind, not to continue to grow the balance sheet. This is.
The maths simply does not work
Here is the practical problem.
The return on investment on assets such as agricultural land cannot absorb an inheritance tax bill at current costs of production, market prices and interest rates. Anyone telling you otherwise has not done the maths against a real working farm.
That is not a complaint about paying tax. That is an arithmetic problem. The asset on the balance sheet, valued for inheritance tax, is the same field that produces the modest annual returns that have to fund the bill. You cannot pay a tax bill out of a return-on-capital that, on agricultural land in this country, has been measured in fractions of a percent for years.
The only way to clear the bill, in many cases, is to sell part of the very asset that allows the business to operate. Which leaves what was a previously viable farming business more than likely no longer viable.
And the unforgiving timing question
Newsflash: we do not know when people will pass away, or in what order. So how exactly do you decide who owns what now to make sure a viable business is always left behind?
That is the planning problem nobody talks about in a policy speech. You can be doing everything right, generationally, and have the structure of your business defined by a date none of you can predict.
My honest worry
I am genuinely proud to be a current custodian of this family farming business. The question I now have to ask is straightforward.
Will my son, my niece and my nephew have the chance to do the same, should they wish?
There are serious doubts over that now, because the sale of assets to pay an inheritance tax bill leaves a previously viable farming business more than likely unviable.
What we are doing about it
We are taking advice on how we can best gear ourselves up for these changes.
It is, frankly, hard to stomach that our livelihoods, our business viability, and our attitude towards growth can swing this dramatically depending on who is in government. What an advert that is for stabilising the economy.
The next year is going to involve a lot of conversations with advisors, a lot of number-crunching, and some decisions that no farming family should have to make on the timetable they are now being asked to make them on.
About the author
Jack Bosworth is a fourth-generation farmer and Director of FJ Bosworth & Sons, an arable and pig farming business at Spains Hall, Willingale, Essex. The farm has been in the family since 1919, and Jack farms alongside his father Stuart Bosworth, who was named Farmers Weekly Pig Farmer of the Year in 2011. The business is Red Tractor assured.
You can follow Jack’s articles on fjbosworth.com, or get in touch via the WhatsApp link on the site.
Fourth-generation farmer at Spains Hall, Willingale. Runs the contracting team and writes most of what appears here.