E-Malt.com News article: UK: British hops, beer under threat because of Government’s ‘tractor tax’

British beer is under threat because of the Government’s “tractor tax”, hop farmers have warned.

The British Hop Association (BHA) said Labour’s inheritance tax raid could sound “the death knell” for hop producers, forcing breweries to import the crop from abroad instead, Yahoo Finance reported on November 26.

Hops, which give beers and ales their bitter flavour, are the flower of the common hop plant and have been used by British brewers since the medieval period.

However, there are now just 44 hop-growing farms left in the country and industry representatives have warned that the Government’s 20 per cent inheritance tax on farming assets worth more than £1 million could force many of them out of business.

Mark Andrews, of the BHA, told The Telegraph that the tax raid would “definitely hurt production”.

“Things are a struggle enough as it is,” said the 10th-generation hop and cider apple farmer from Ledbury, Herefordshire.

“A very large tax bill, even though it can be spread over 10 years… I can see hop production diminishing.

“It could be the death knell for British hop growing. Brewers would have to import much more foreign hops.”

The BHA estimates that Britain’s total acreage under hop cultivation has declined by 40 per cent since 2019.

Mr Andrews farms 150 acres, 35 of which are used to grow nine different varieties of hop.

He said: “We have 150 acres in Herefordshire. We’re quite small really. Hop farms tend to be on the small side.

“I’m in my late 50s, so we might be able to prepare for the tax. But anyone who’s in their 70s has got a real problem.

“Most of the farms will be caught more than they were. There are small revenues but big capital values so it would be a major struggle [to pay the tax].”

For a pint to be entirely made in Britain, all of its ingredients – malt, hops, yeast and water – would have to be sourced and processed domestically.

Increased imports of foreign-grown hops would therefore make wholly British-made beers and ales rarer.

The British Beer and Pub Association also warned that breweries would be harmed if the country’s hop farmers were “jeopardised”.

A spokesman for the organisation, which represents 90 per cent of the country’s brewers and 20,000 pubs, said breweries “rely so much on” hop and grain growers.

“The farming sector forms a crucial part of the brewing and beer supply chain, which, if jeopardised, could impact many brewers across the country who themselves are currently [facing] significant new cost challenges,” they added.

The Government has attracted major criticism over its changes to agricultural property relief, which were announced in last month’s Budget.

Previously, farmland and other assets qualifying for the relief could be passed on free from inheritance tax.

However, from April 2026, only up to £1 million will be exempt – with any amount above this subject to a 20 per cent charge on death.

Thousands of farmers marched on Whitehall last week to protest the changes, which they say will lead to the dissolution of family farms, many of which have been passed down the generations for centuries.

The National Farmers’ Union (NFU), citing Department for Environment, Food and Rural Affairs (Defra) figures, has said approximately two-thirds of farms are worth over £1 million and would therefore be at risk.

The Government maintains that fewer than 500 estates a year will be affected by the changes. This is based on data from HM Revenue and Customs showing the number of estates claiming agricultural property relief each year.

A spokesman for Sir Keir Starmer, the Prime Minister, said he had “recognised the strength of feeling” among farmers when he met with Tom Bradshaw, president of the NFU, on Monday afternoon.

However, he refused to make any compromises on the policy.

Sir Keir’s official deputy spokesman told reporters: “The Prime Minister took the opportunity to have a constructive conversation with Mr Bradshaw about why we believe the changes are the right approach and to discuss how we can support them.

“We’re not considering mitigations for the policy. We’re fully committed to implementing it as we’ve set out.”

The spokesman added that the pair had a “wide-ranging conversation in which the Prime Minister recognised the strength of feeling about the changes to agricultural property relief set out in the Budget and listened to the NFU’s concerns.”

They added: “In the meeting, they discussed the Government’s commitment to solidly protecting the interests of British farmers, including in trade negotiations and public sector procurement, as well as working together to make sure environmental land management schemes deliver for farmers.”

Mr Bradshaw said: “I welcome the Prime Minister asking to hear directly about farmers’ concerns, and I am grateful to him for taking the time to do so. I hope we can work together towards a resolution on this issue.”

Defra was approached for comment.


27 November, 2024