Time to Revisit Succession Plans

This article was correct at the time of publication. The rules referred to apply until 6th April 2026, at which point the changes announced in the Autumn Budget 2024 will come into effect. Early advice should be sought on the impact of those changes on your personal and business circumstances.

 

The Chancellor’s Spring Statement is expected to set out a number of important changes that will affect farmers and landowners. In our latest article, Mike Bracegirdle takes a look at these changes.

One way or another the Chancellor will have to seek to “balance the books” following the massive support the Government has provided, and continues to provide,  as a consequence of the COVID-19 pandemic.

Currently it is an uncertain economic outlook for many farmers, especially those with sheep and dairy, amid concerns over the implication of Brexit and the continued threat of imports from countries whose animal welfare standards do not meet our own.  The Office of Tax Simplification (OTS) review of Inheritance Tax in 2019 recommended streamlining IHT but this may well have the effect of reducing some of the current reliefs for farmers and landowners.

Inheritance Tax

As it is at present, farmers and landowners who are actively farming or who have let land under an Farm Business Tenancy have assurance that they can pass the farm to a next generation without a crippling IHT burden. Land and property can qualify for 100%  Agricultural Property Relief, whilst none-agricultural land and property together with diversified enterprises can qualify for 100% Business Property Relief as part of a farming business.

Capital Gains Tax

Transfers on death currently qualify for CGT free uplift, but the OTS recommendation would remove the free CGT uplift on death meaning that the next generation would inherit the farm at a low historic base cost , leading to a much higher CGT liability on a future sale. Indeed CGT  current rates are also likely to increase if the current rumours are to be believed. 

Furthermore, proposals to alter the trading test for BPR –bringing it into line to CGT trading test that requires 80% of the business trading –  could leave farmers ineligible for 100% BPR.

 Whatever changes are afoot, it is important to periodically review your succession plans to ensure that you are making the most of the reliefs and allowances available to you.

Butcher & Barlow LLP

Butcher & Barlow’s Agriculture team works collaboratively with our Private Client and Commercial Departments to ensure that we can assist with all aspects of your business and personal affairs, from helping you set up your business and providing advice on trading structures to putting in place Lasting Powers of Attorneys and drafting your Wills.

Contact Mike or another member of our team at our dedicated Agriculture and Commercial office on Gadbrook Park, Northwich on 01606 334309.