It is often said that there are two things in life that are a certainty: death and taxes.
We all manage to speak about tax willingly, albeit often with gritted teeth. However, when it comes to death, it’s more common to shy away from the subject. But when it comes to farming businesses, dealing with the subject of retirement or death simply can’t be ignored.
In years gone by, it was often just “assumed” that the farm would pass from one generation to another and there seemed to be less discussion required. In most instances, values were shared and parents knew that their offspring would take up the baton and run with the farm in the same way they did when they took over from their parents.
Today, farming is more complex than it was then and planning the passing down of the family farm is an essential part of running a tight ship.
If you are in the situation where you are facing retirement or are thinking about hanging up your agricultural boots then now is the time to be taking tough decisions about what will happen in the future. Ideally you’d have thought of this well beforehand, but if not, it’s not too late. Although it’s not an easy subject, like most subjects in life, once you’re informed and once you get your cards on the table, better decisions will be made and they will be made with more ease.
More than likely when you are planning to pass down the family farm, you will have very clear ideas about what you envisage happening in the future and you may even think that several things go without saying, but in order to avoid future disputes, it’s essential that everything is discussed, detailed and documented.
Here are our key recommendations:
- Get the professionals on board. When you’re planning to pass down the family farm, it’s essential to get the details right. Working with your accountant and a solicitor is a great start. If you already have a good working relationship with these professionals, all well and good. They’ll understand your business and will be able to guide you with regard to the most efficient and most effective way to achieve your objectives.
- Explore all the options. As an owner-occupier, there will be several options open to you, some of which you’ll no doubt be aware of, others you mightn’t be. Looking at every land arrangement possible might unveil a solution that you hadn’t thought of previously. It’s essential to get outside help so you can become conversant with every option.
Here are some of the options you might consider:
- Set up a contract farming or license agreement. If you’re not ready to walk away completely from your responsibilities, it may be a sensible option to consider using contract farming or license agreements so you retain control at the same time as stepping away from at least some of the ‘hands on’ work.
- Get successors more involved. It might be useful to look at the benefits of taking in a partner or setting up a company so you can bring one or more successor into the business while you are still at the helm.
- Let the farm. If you have no natural or identified successors, you might think of letting the farm. While this can be an attractive way to secure yourself some income, it doesn’t come without its disadvantages, such as the possible loss of certain tax reliefs. Farm letting is a complex affair and is well worth exploring in great detail before going this route.
- Sell the farm. Selling the farm is an option if you want to walk away completely and don’t have a natural successor. What’s more, land is attractively priced right now and there are certain Capital Gains Tax reliefs that could make this option even more lucrative. However, once more this isn’t an option to enter into lightly and is one that you need to be ready for emotionally as well as financially.
If the time has come for you to consider passing down the family farm and you’d like some guidance and support, why not call us on 01763 247321?