§ Mr. Spence
asked the Chancellor of the Exchequer if he will summarise the concessions on capital taxation applicable to the farming industry and indicate how each takes into account the industry's special problems; and if he will make a statement.
§ Mr. Denzil Davies,
pursuant to his reply [Official Report, 18th July 1975; Vol. 895, c. 631], gave the following information:
Schedule 8 to the Finance Act 1975 provides a special capital transfer tax relief for agricultural property occupied by full-time working farmers. If the transferor qualifies as a working farmer, the agricultural value of farm land which he transfers may, subject to certain limits, be 236W taken as 20 times the rental value. The The limits, which are applied to each transferor on a cumulative basis, are 1,000 acres or£250,000 in value, whichever is the greater. In addition, subject to a£250,000 limit, paragraph 16 of Schedule 4 enables an election to be made to pay tax by interese-free instalments over eight years if the tax arises on business assets, including, in appropriate circumstances, farm land. These instalment facilities are available for transfers on death and for life-time transfers if the transferee pays the tax.
The special valuation rule for agricultural land takes account of the problems faced by the working farmer as a result of the inflated value of agricultural land. The instalment facilities for land and business assets were provided to make it easier to pay capital transfer tax without selling assets transferred.
Clauses 53 and 55 of the Finance (No. 2) Bill 1975 introduce broadly similar concessions for capital gains tax arising on the occasion of a gift or certain deemed disposals.
In addition, under Section 33 of the Finance Act 1965 and paragraph 18 of Schedule 3 to the Finance Act 1974, a farmer may be able to defer payment of tax on gains accruing on the sale of the whole or part of his farm if the proceeds of the sale are spent on acquiring new assets. This relief will be particularly helpful to the farmer who wishes to sell one farm and buy another, or sell off part of his farm in order to finance certain types of capital expenditure. A farmer of retirement age is exempt from tax on capitial gains and development gains of up to£20,000 which accrue by way of the sale or gift of his farm. This relief was provided in recognition of the fact that the pension provision of self-employed persons is frequently small; it also serves to reduce the capital gains tax payable on a gift of a family farm from father to son.
It was announced in "Food From Our Own Resources" (Cmnd. 6020) that the Government were reviewing the effect of capital taxation on agricultural production, and in its Green Paper on the proposeud Wealth Tax (Cmnd. 5704) the Government recognised the need to examine the possibile conseqnencese for agricultural efficiency and investment.