Although cuts to farm inheritance tax relief have caused uproar in rural communities, these reforms could actually have positive outcomes, says Norfolk farmer and industry advisor Emily Norton.

Don’t be fooled by the family farm doomsayers and media drama playing out around the inheritance tax changes for farms.

Changes to these rules are long overdue and could even be positive for a sector in urgent need of new ideas.

I am lucky to be born into a farming family and stand to inherit a small farm. As a family, we have only ever been advised that the older generation of farmers – my parents – need to stay involved in the farm until they die.

This advice became invalid on Budget Day, as my parents now need to pass on ownership at least seven years before they die to qualify for the same reliefs.

Let’s be clear on this: farmland still qualifies for generous taxation reliefs, just with a different process for obtaining them.

Much of the lobbying has focused on how many farms might have to pay, but the answer is very few if they have time to change their tax planning.

For those who don’t have time, there is a legitimate case for concessions from government. This should be targeted advisory support and ideally a form of insurance to cover death within the seven-year taper period.

To the casual observer, tax reliefs for farming may seem a curious perk. In fact, they are just one part of the policy toolbox that enables farmers to survive in a cheap food economy. It is no coincidence that inheritance tax reliefs for farms were introduced in 1984, just as the supermarket economy here was really taking off.

Both income and capital tax reliefs have allowed slim and unpredictable profits to be reinvested within farm businesses rather than paid to the exchequer.

However, the reliefs have led to perverse outcomes, including driving up land values and delaying and frustrating succession conversations. For far too long, tax planning has been the shadowy hand guiding farming business planning.

Even now, farmers will be manipulating their farming businesses to prove to HMRC that they fall within the definition of "agriculture" that allows them to qualify for the tax reliefs.

On one hand this is reasonable: celebrity wealth buying up farmland for the tax perks is one of the reasons Labour has chosen to make the change.

However, the definition of agriculture is holding us all back. It is grounded in an idea of what most Norfolk residents see day to day: tightly clipped hedges, fields ploughed edged to edge, and maximised yields of "clean" crops with no pests and diseases.

All the evidence is pointing to the damage this is doing to our ecology and our health, but unless we farm like this then there’s a risk we don’t qualify for the tax reliefs. It’s holding the tenanted sector back in particular, as these farmers can even be prevented from diversifying if this is not strictly "agriculture".

I like to imagine an alternative future where the tax system is a powerful lever incentivising our farmers to do things that were in the broadest public interest.

A fit-for-the-future definition of agriculture might help here. But what if inheritance tax reliefs were at 100pc only for farmland managed under a recognized environmental scheme? Or only for land let to tenants for 10 years or more? The public benefits would be substantial.  

Adopting new ideas and new methods can be risky, but there are plenty in the next generation who can’t wait to be given the opportunity to get going. 

Through a provocative tweak to APR (agricultural property relief), government may just have given them the nudge they have been waiting for.

It may also have inadvertently opened the door to a wider and more productive debate about forces that underpin the cheap food system.

With stretched public finances and tough environmental and climate goals to reach, it’s time for a broader conversation about how the tax system could be reformed to play its part.  

Emily Norton is a Norfolk farmer, Nuffield scholar and founder of Farm Foresight Ltd, a strategic advisory service for the rural sector. She holds a number of board positions including as a trustee of the Royal Norfolk Agricultural Association (RNAA).