'Any new taxation could spell the end of farming'

Cambridgeshire farmer Tom Mead is worried about changes made in the government's Budget

A farmer has said he believed that the government's forthcoming Budget could force more people to leave the agricultural industry.

Tom Mead, from Meads Farm in Foxton, Cambridgeshire, said the current state of the sector already leaves farmers with slim profit margins and that any new taxes could "tip many over the edge".

The Country Land and Business Association (CLA) said potential cuts to agricultural funding and changes to inheritance tax could have a profound impact on the sector.

A spokesperson from the Department for Environment Food and Rural Affairs (Defra) said: “We do not comment on Budget speculation. We will champion British farming to boost rural economic growth."

Cath Crowther, the CLA's regional director for the East of England, said that profitability in farming was already low. She added: "There are lots of rumours in farming circles right now. But [changes to] agricultural property relief is the big one."

Agricultural relief allows land or pasture that is used to grow crops or to rear animals to be free of inheritance tax.

"Essentially, if it is scrapped, there will be a 40% tax on the death of a farmer, should they want to pass their property or land on to the next generation," she said.

Cath Crowther believes an inheritance tax on farmers could destroy many family farms

Mr Mead agreed with the CLA and said: "At best we're making between 1.5% and 2% return on the capital we have invested in. We are anything but a high-flying industry that is making massive profits. Any increase or new taxation could literally spell the end."

The CLA said the government's current policy - where agricultural relief exists - was there for a reason. Ms Crowther added it was set up to allow one generation to pass on its assets to the next and that "no-one will be able to afford to do that if it is subjected to a 40% tax hit".

She added: "Family farms will be split up. And then who is going to produce our food?

"As UK agriculture, we are trying our best to look after the environment and produce decent quality food. There are already many constraints pulling us in many directions. We really don't need more, in the form of new, unwelcome taxes."

A spokesperson for Defra added: "The government will restore stability and confidence in the farming sector, introducing a new deal for farmers to boost rural economic growth, strengthen food security and improve the environment."