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Farming

Farmers should prepare for IHT changes

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FARMERS should review their Inheritance Tax (IHT) and succession plans ahead of the Spring Statement as potentially significant changes are expected, according to rural accountant Old Mill.
There are less than six months before the Spring Statement, and changes to the IHT format – based on recommendations originally outlined by the Office of Tax Simplification (OTS) in July 2019 – are likely. “The recommendations were primarily geared towards streamlining IHT administration but may have the secondary effect of reducing some of the favourable reliefs available to farmers,” explains Catherine Vickery, associate director at Old Mill.
“Current IHT legislation can be very beneficial for farmers, giving confidence that they can pass down agricultural business and property assets to the next generation tax free on death,” she adds. “Unfortunately, the coronavirus pandemic has left the Government with a very large debt, so there’s potential that it will implement any OTS recommendations to increase tax revenue.”
So, with the Spring Statement anticipated for March, what can farmers do to mitigate any potential changes?
“Under the existing rules, agricultural land and property qualify for Agricultural Property Relief (APR) from IHT at up to 100%,” explains Mrs Vickery. Other land and property assets, like diversified enterprises, can qualify for up to 100% Business Property Relief (BPR) as part of an overall farming business which is at least 50% trading. “These reliefs can apply on lifetime transfers as well as on death where the conditions are met.”
Transfers on death currently also qualify for Capital Gains Tax (CGT) free uplift so that gains are effectively washed out. Lifetime transfers of agricultural land, property, and businesses which are at least 80% trading qualify for gift holdover relief, meaning gains can be deferred until a later disposal.
However, a key OTS recommendation is to remove the CGT free uplift on death when IHT relief is also available. This would mean that the next generation would inherit the farm at an historically low base cost, leading to higher CGT on any future sale.
The OTS has also just released its report into CGT simplification which echoes this same recommendation.   Proposals to alter the trading test for BPR, aligning it to the 80% CGT trading test could leave farmers ineligible for 100% BPR, which could result in assets having to be sold to pay IHT liabilities.
“The most tax efficient option has often been for farmers to continue to actively farm and hold onto assets until they die,” says Mrs Vickery. “Now, given speculation about potential changes, the best course of action is to get a succession plan in place as soon as possible and start implementing it.
“Plans need to be arranged based on what is right for you, your family and the farm right now, rather than how things might stand at a later date.”
This means establishing who is taking on the assets and if they have the skills needed to drive the business forward. “Pass over this responsibility while you still can and while you can be on hand to guide and support your successor,” advises Mrs Vickery.
It’s also important to review partnership or shareholder agreements, and consider the handing on of other assets. Additionally, farmers should collate any trust and gift deeds, so that paperwork is on hand to be reviewed.
“Though we suspect the new IHT rules won’t be favourable, farmers need to make use of the rules we have now as these are a current certainty,” says Mrs Vickery. “Succession planning is so easy to put off but it’s a vital tool in safeguarding the future of farming businesses.”

Farming

MP calls for government-led campaign to halt rural population decline

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WALES should follow example of Western Australia in attracting doctors and nurses, says a local MP

Plaid Cymru MP for Ceredigion Preseli, Ben Lake, has said that Wales should follow the lead of regions like Western Australia in attracting workers to fill skill shortages in public services through promotional campaigns.

He warned that rural depopulation in Wales could lead to a “collapse of public services” without government intervention to retain young people in rural areas and attract workers from other parts of the world.

Western Australia launched a campaign last year targeting workers in the UK and Ireland, enticing them with promises of higher salaries, a better quality of life, and lower living costs. WA government minister Paul Papalia declared in the promotion, “We are here to steal your workers by offering them a better life in one of the most beautiful places on the planet.”

Ben Lake MP highlighted the “many benefits of rural living” in Wales and urged both the Welsh and UK governments to do more to attract key workers to rural communities. He noted that Ceredigion recorded a 5.9% decrease in its population in the last census, while Pembrokeshire’s population remained stagnant. The constituency is experiencing the “real consequences of depopulation,” including a shortage of GPs, the absence of NHS dental services in much of the region, school closures, and the lack of banking facilities.

Rural Wales will face a “collapse of public services” unless the Welsh Government, together with the UK Government, which holds all powers relating to immigration in Wales, take action to help attract workers.

Speaking in Westminster this week, Ben Lake MP said: “I represent Ceredigion Preseli. At the last census, Ceredigion—the majority of my constituency—recorded a 5.9% decrease in its overall population, and the communities in Preseli or Pembrokeshire that I now represent saw their population flatline. This is a problem that we are very much living with today. What does it mean? In practice, it means that we are having very difficult discussions about, for example, the provision of public services and whether the school estate is sustainable for the future. We are talking about the lack of GPs and the fact that we do not have an NHS dentist any more in much of the constituency. There are three well-known banks in the UK that no longer have a single branch in the two counties that I represent. This is the real consequence of depopulation.

He continued: “This is something that the UK Government can help with, and it should be on their radar. When the Cabinet Office looks at the range of risks it must monitor as part of its remit—something that the Public Accounts Committee discussed in the previous Parliament—it should look at how the discrepancies in demographic trends across these islands might have an impact on key public services, because in certain areas of rural Wales we will, I am afraid, see a collapse of public services. That will have a knock-on impact on more urban areas, which are themselves struggling with different demographic pressures.

“This is an important debate, and I would ask the Home Office Minister to consider, as part of her important work in this new Parliament, the lessons to be drawn from experiences across the world. My hon. Friend the Member for Perth and Kinross-shire (Pete Wishart, SNP) mentioned the experience of Quebec. As west Walians, we often turn on the radio to hear adverts from the Government of Western Australia trying to attract many of our young doctors and nurses to migrate to that part of the world. Are there incentives we could use to persuade more of our young people to stay or to attract those from other parts of the world? There are many benefits to rural living. Perhaps we could be more creative in grasping this problem by the scruff of the neck, because I fear we do not have much time left to deal with it.”

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Farming

Collaboration at the heart of new funding scheme for farmers

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THE development phase of the new Integrated Natural Resources Scheme (INRS) is open for applications until 27 September.

The INRS will enable farmers and others to work together to improve our natural resources and deliver benefits to farm and rural businesses.

A webinar has been arranged by Farming Connect on 11 September to give farmers the chance to learn more about the scheme and ask questions.

Although the scheme is separate from the Sustainable Farming Scheme it will be used to inform the collaborative element of the scheme during this interim period.

This scheme forms part of a preparatory phase of activities which may lead to collaborative projects ready to participate in the Collaboration Layer of the Sustainable Farming Scheme when it is introduced.

The scheme will provide funding for implementing nature-based solutions at the appropriate scale, targeting action and interventions to enhance and sustainably manage our natural resources.

Cabinet Secretary for Climate Change and Rural Affairs, Huw Irranca-Davies, said: “The scheme has been developed to focus on collaborative action – enabling farmers and land managers to do something they do very well – which is working together to deliver innovative solutions. These projects will improve our natural resources in a way which delivers benefits to farm and rural businesses, rural communities, and wider societal benefits.

“We are committed to supporting farmers to produce food in a sustainable way, whilst taking action to respond to the climate emergency and to help reverse the decline in biodiversity.”

This could include projects which enhance our carbon-rich soils such as peatlands, creating and managing woodland, implementing natural flood risk management, enhancing access and public engagement, protecting landscape and historic features. Or, deliver actions to enhance priority and semi natural habitats, improving the connectivity, scale, adaptability, or diversity of semi natural habitats and our natural features, ensuring ecosystem resilience. Projects could also strengthen the resilience of Wales’ network of protected sites by working at a landscape scale to improve connectivity and condition.

Further information is available here www.gov.wales/integrated-natural-resources-scheme-rules-booklet-html

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Farming

Royal Welsh Winter Fair livestock competitions schedule now available

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THE livestock competitions schedule for the 2024 Royal Welsh Winter Fair is now available online.

The Royal Welsh Agricultural Society is inviting farmers, breeders and exhibitors to visit the official website – https://rwas.wales/winter-fair/competitions/ –  to view the full competition details, entry requirements and key dates.


This year’s winter fair, scheduled for November 25 and 26, promises to showcase the best livestock from across the country in a festive celebration.

Pictured above: The supreme cattle champion at last year’s winter fair.

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