CLA president Victoria Vyvyan said farmers and small businesses were ‘pulling investment, cancelling machinery orders and considering whether their businesses are viable for the long term'.
The amount of money which will be raised via the changes to Inheritance Tax is uncertain, as behavioural change will determine how many people are affected by it, according to the latest report by the Office for Budget Responsibility (OBR).
Agricultural Property Relief and Business Property Relief
The OBR has released further information on costings for the policy change to Agricultural Property Relief (APR) and Business Property Relief (BPR) following a request for more detail.
The report found the main driver for uncertainty in revenue raising was the behavioural response to the measure, given the range of tax-planning options potentially available, including greater use of other reliefs, greater bequests to charity and potentially running down the value of estates.
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'Uncertainty' in revenue
The OBR added there was a ‘moderate uncertainty' around the data used in the costing for the proposed policy, with an ‘established back series of administrative data for APR and BPR claims but less information on AIM shares'.
CLA president Victoria Vyvyan said: "Ministers have repeatedly said that the OBR had certified their claims, but the truth is that the OBR themselves say there is a high degree of uncertainty as to how much money will be raised, if any at all."
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'Pulling investment'
She said farmers and small businesses were ‘pulling investment, cancelling machinery orders and considering whether their businesses are viable for the long term'.
"This means fewer jobs, less food security, less growth and less money going into the Exchequer to pay for public services," she added.
This alongside being 'highly uncertain' whether the IHT measures would raise the £500m for the Treasury.
Elderly farmers
In the report, the OBR said it was likely to be more difficult for some older individuals to quickly restructure their affairs in response to the proposed measures.
NFU president Tom Bradshaw said: "This OBR report confirms what we have repeatedly warned since Budget Day; that it will be older farmers who will be hardest hit by the Government's misguided family farm tax.
"One minute they were advised to keep their farms until death to pass them on to the next generation, the next they are left knowing that if they live beyond April 2026 when the measures come in, their children may have to break up or sell the farm.
"What an appalling position to put elderly people in.
Consultation
"I outlined the terrible human impact on elderly farmers explicitly when I met the Prime Minister, and in a personal letter I wrote to Chancellor Rachel Reeves, and again in front of the recent Efra Select Committee. At every stage, the Government has consistently ignored what we have been telling them about this abhorrent policy.
Is it now going to ignore the OBR too?"
Mr Bradshaw said given the OBR had come out and said it was 'highly uncertain' it the tax changes would raise the expected amount of money, it was now time for Ministers to accept the policy needed 'proper consultation'.
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