Ariane Burgess, Scottish Green MSP for the Highlands & Islands region, has pressed the Scottish Government to provide greater clarity on how UK Budget reforms to inheritance tax on agricultural land will affect small farms and crofters.
She has also urged Farming Minister Jim Fairlie to ensure the changes don’t have a negative impact on land reform.
In the UK Budget, Labour announced it would reform agricultural property relief and business property relief from April 2026.
Estates worth up to £1 million will be exempt, with charges at 50% of inheritance tax rates thereafter.
The Treasury claimed that this would help to protect family farms and businesses.
But there are concerns that the new rules could negatively impact land reform in Scotland.
After urging the Scottish Government to not let that happen in the Scottish Parliament on Wednesday (6 November), Ariane Burgess said:
“While the impact of the changes has yet to be seen, I am concerned that this legislation could do more harm than good.
“If, as has been suggested, smaller farmers and food producers are forced to sell up, we could see more land ending up in the hands of big agribusiness.
“Not only would this be damaging to livelihoods and the social fabric of our rural communities, but it would also set us back significantly on nature and the climate.
“The UK and Scottish Governments must closely monitor how the change will affect small farmers and food producers.
“What the new rules must not do is prevent these businesses from planning for the future.
“Whitehall must step in immediately if it becomes clear that the changes are doing more harm than good.
“There could be a positive outcome to the legislation.
“For too long, the Agricultural Property Relief scheme has been abused as an inheritance tax loophole by wealthy people.
“This has driven upland prices, all but closing the industry off to new entrants.
“I hope that by toughening up the rules, these negative changes will be reversed.
“But previous experience suggests that wealthy landowners are all too adept at getting around the rules through complex corporate and trust structures.
“I would suggest to my colleagues in Westminster that this legislation is paired up with tougher tax avoidance measures, so that it hits its intended targets.”
Ariane Burgess also called on the Scottish Government to be brave now that it has greater control over how much it can spend on agriculture and fisheries.
In the UK Budget, the Treasury announced that the funding for farming in Scotland will no longer be ring-fenced.
Instead, it will be given to the devolved administration as part of the block grant that is calculated using the Barnett Formula.
While agriculture and fisheries are already devolved powers, the change means Scotland will now have a greater ability to decide how it sets budgets for crofting, farming and fishing.
Ariane Burgess said:
“This is a major development that could lead to significant positive change for our crofters, farmers and fishers.
“It will give the Scottish Government the ability to increase funding for these key sectors and set multi-year settlements, providing certainty to businesses and allowing our nation to be in much greater control of its own destiny when it comes to food production.
“The change will also end the farce of our Government having to hand any unspent funds back to Westminster.
“I would urge the Government to be brave and use these new powers to deliver the objectives of the Agriculture and Rural Communities (Scotland) Act 2024.
“It must also think long-term, using this opportunity to promote nature-friendly, regenerative farming and fishing methods, as well as boost local food networks.”
