WARNING - Diversification Could See Farmers Face Inheritance Tax

There is much in the press informing us of how many farmers are branching out into other activities/businesses.

 

The potential to diversify is massive. We hear about farmers diversifying into tea rooms, riding schools, bed and breakfast, outdoor activities and even a specialist bra supplier (Ample Bosom) in order to keep their main income healthy.

 

However, farmers must be aware of the potentially dangerous inheritance tax implications in diversifying their business.

 

Changes in how land is used can affect the farmer's entitlement to Agricultural Property Relief (“APR”) for Inheritance Tax (“IHT”). APR is a valuable relief for owners of rural property but it can cause problems when farmers diversify i.e. if agricultural land and buildings are adapted for alternative purposes they may not be entitled to APR.There are also important rules regarding not only the occupation but the length of ownership of the property. Farmers and land owners who have decided to change, or are considering changing, the use of their land, should be aware that they can lose APR. If they do so, to mitigate IHT, they must try and ensure that they qualify for the alternative, Business Property Relief (BPR.)

 

For further information see:

New Business Ventures Could See Farmers Face Inheritance Tax warns lawyer

or contact Latimer Hinks on 01325 341500

Anne Elliott is a member of the Agricultural Law Association, as well as a Recommended Professional for the Tenant Farmers Association. In 2011, she was cited in the prestigious Legal 500 directory for both her work on Inheritance Tax and in the category of Agriculture and Estates. This was followed by a recommendation in Chambers 2012 for her expertise concerning, among other areas of law, the Agricultural Holding Act.

 

 

Finance for Farmers - follow up

If you really wanted to attend the Latimer Hinks/Barclays presentation on Finance for Farmers but were unable to make it - here is a brief outline of what was discussed

FINANCIAL SEMINAR FOR FARMERS

Latimer Hinks Solicitors have recently co-hosted with Barclays Bank a breakfast presentation on the theme “Finance for Farmers 2010.”

Issues explored included lending in the current financial climate, the legal issues surrounding providing security for borrowing and the importance of planning for the future and how to achieve it.

Presentations were given by Anne Elliott and Rosanne Green, Agricultural Specialists at Latimer Hinks Solicitors and Martin Redfearn, National Agricultural Specialist with Barclays Bank.

Rosanne Green outlined the legal formalities relevant to providing Banks with security for lending.

One of the important factors highlighted was that the borrowers and the owner occupiers may need to seek separate legal advice.

Rosanne used the example parents owning a farm, but the borrowing being taken by the farming partnership, perhaps including not only the parents but sons/daughters/daughters-in-law etc. Each would need to be advised in their different capacities.

Anne Elliott explained that at the point in time where borrowing is being taken/considered it is very important to look at the structure of the business and the aspirations/intentions of the various parties.

She stressed it was important for farmers to talk to all their advisers - the bank, the accountant, property or personal lawyer and financial adviser in terms of analysing where a business is going and, importantly, succession planning for older generations.

Anne Elliott said: “The event provided a range of practical advice and information which those attending could take on board and which I hope will prove useful in their farming businesses.

It was good to provide the opportunity for people to hear what is involved in relation to setting up and finalising borrowing arrangements and also to talk informally to professional advisers.”

The event was of course followed by a breakfast of bacon and sausage sarnies!