Too many farmers put off planning for succession, an agricultural law expert has warned.
Melissa Taylor, solicitor in the Rural team at Lancashire law firm Napthens, reveals that farmers who have worked all their lives are often reluctant to step back from their farm and business livelihood. This can be because they fear they will lose the business, for tax implications, or for other personal concerns.
Farmers are an ageing demographic, with Government figures showing that more than half of farmers are 55 or older, compared to 22 per cent of urban self employed.
Melissa advises that there are options for farmers if they wish to retire or reduce their involvement in relation to physical labour.
She explained: “If a farmer wishes to retire altogether, they may decide to sell the farm either as a whole or in lots, or retain ownership and rent it out on a farm business tenancy. Successors to the business may purchase or rent it at the open market value, or there may be an element of gift or loan. But in relation to all such options, there will be tax implications which it will be important for a farmer to consider prior to any transaction.
“The majority of farmers are not keen on retirement, but as age increases it is important to take a fresh look at the situation. If there are no successors in place, a farmer could employ workers to carry out the more manual roles.
“If successors do exist, they may be employed or brought into a farming partnership providing them with a stake and responsibility in the business. Other options are grazing agreements, contract farming agreements or even diversification.
“It is very important to consider the tax implications of the options available, for example capital gains tax on any sale or gift of the farm and inheritance tax in relation to gifts and the ownership of assets at death. Even if a farmer decides not to retire in his lifetime, it is still important to consider succession planning and the future of the business.
“Farmers unsure of their options should contact their advisor for more information.”