In the past the farming industry has been notoriously bad at succession planning. This trend is now beginning to change, and most farming families now recognise the importance of succession planning and a good 5-10 year plan to ensure the retiring generation have adequate pensions.
Ownership and occupation of the farm is not always as simple as it sounds, and it is imperative that careful consideration is given to the trading structure. Most commonly this will be a partnership. Partnerships can be complex, and careful consideration must be given to any agreement put in place. Failure to do so could have unintended results which could be costly.
In conjunction with your accountant we can help ensure that retiring partners are able to claim entrepreneur’s relief where appropriate to reduce any potential Capital Gains Tax Liability. Our dedicated agricultural team can also advise you on Agricultural Property Relief and all aspects of tax planning. The retirement of a partner is often linked with inheritance tax and estate planning which in turn can lead to property being transferred into a Self Invested Personal Pension (SIPP). We can guide you through this often complex area.
When thinking about a retirement from the Partnership, it is vital to have in mind certain potential pitfalls such as:-
- Changes to the structure of your farming business could have consequences for succession rights under an Agricultural Holdings Act Tenancy. Be cautious before taking any actions as the loss of succession rights under such a tenancy could be costly.
- Many farming families are too keen to simply give away land without taking advice. The timing of gifts could have various tax implications.
- A number of farming families risk losing Agricultural Property Relief by giving away land and continuing to derive a benefit, for example by continuing to occupy the farmhouse.
The importance of starting your Tax planning early cannot be over emphasised, and our agricultural team can advise and guide you through every aspect of the process.