Sheep in the Sunshine, Tax in the Shade

I’ve revisited the farm Inheritance Tax debate, wondering how solar farms affect the argument, so I did some digging (I’m starting to hate the word research as it has become debased by Reform supporters’ shouts of “Do your research,” when what they mean is to visit a Facebook echo chamber).

What I wanted to know was simple. If a farmer leases a chunk of land to a solar operator for 30 or 40 years, what happens to all the high-minded talk about Agricultural Property Relief and protecting the sacred continuity of the family farm?

The answer is not ideological. It is technical.

If the land stops being used for agriculture, Agricultural Property Relief may fall away on that portion. Solar generation is not farming. It is an energy business. If sheep genuinely graze beneath the panels, you may preserve relief on the agricultural value. If it is fenced off and humming away like a polite industrial estate, relief becomes harder to defend.

On the other hand, Business Property Relief might step in if the wider enterprise remains mainly trading rather than mainly investment. That “mainly” test is where advisers begin earning their sheep.

And here is the delicious irony.

The same voices arguing that unlimited inheritance tax relief is essential to prevent the breakup of fragile, cash poor farming businesses are often the same voices signing index linked 40 year leases at £900 an acre with minimal operational risk. Quite rational. I would do the same. But it slightly undermines the image of the perpetually imperilled ploughman.

Let us be clear. Diversification into renewables is good business. It provides stable income. It improves liquidity. It strengthens balance sheets. It makes servicing a deferred tax bill far less apocalyptic than the tractor convoy suggests.

What it also does is blur the line between working agricultural enterprise and structured land investment. Once land becomes a long term infrastructure asset with sheep as a decorative accessory, the moral case for unlimited, unconditional inheritance tax exemption becomes less self evident.

This is not an attack on farmers. It is an observation about coherence. You cannot simultaneously argue that land is uniquely deserving of tax immunity because farming is uniquely precarious while also turning parts of that land into highly predictable energy income streams and expect no one to notice the tension.

The debate should be honest. If relief exists to protect active trading businesses from forced break up, then structure it accordingly and apply it consistently across sectors. If relief exists to preserve land wealth across generations regardless of use, then say so openly and defend that principle.

But spare us the pastoral theatre. The sheep are grazing beneath solar panels, the rent arrives on time, and somewhere a tax adviser is quietly updating a spreadsheet.