The Future of Farming
By Laura Maden -Solicitor
Retirement from any business is always difficult but with farming, it is particularly complex.
The average age of the UK farmer is in fact 59 years old with almost a third of all farm owners or occupiers over the retirement ages of 65 years. This is mainly due to the fact that this profession is a way of life as well as a livelihood. It is a business which is passed one from one generation to the next and, is largely inherited from immediate family or close family members.
Also, with the business itself pretty much being on the doorstep, it makes it incredibly difficult for farmers to step back from the business. However, it is imperative that great thought is given to succession planning, when it comes to the family farm.
This may well include ensuring that a good Farming Business Partnership Agreement has been drawn up between the relevant members which will also consider what will happen with the assets of the farm including the land and buildings, if these are owned, by the senior generation. Is it envisaged that those will be transferred to the partnership on retirement, if, the partnership doesn’t already own that property outright. Or, is it the case that the farm may need to be broken up to be divided between children upon death? These are all aspects which need to be considered along with the various reliefs that are available to farming families when it comes to Inheritance Tax.
However, it may also be worth considering gifting certain parcels of land from one generation to the other to pass the farm through the family especially when the senior generations have begun to take a back seat in respect of the farming activities, and diversification may mean that the farm itself may not qualify for some or all of the reliefs available to it.
A further aspect that affects many farming families is how the younger generations can be brought into the farm so they too can live on site. This will enable them to take a more active role in the farm itself as well as assisting the older family members. However, the shortage of rural housing makes this incredibly difficult. The CLA for example is proposing that the Government support farming families where a new build is constructed specifically to enable farmers to retire or transfer the farm from one generation to another. Succession planning is difficult at the best of times but with a family farming business it can become incredibly complex. We would therefore always recommend that you meet with your legal and financial advisors to discuss the best way forward for you and your family. For further information relating to tax planning or agricultural affairs, please do contact a member of Chubb Bulleid who will be able to provide further guidance.