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Farmers – ‘know what you own!’
An expert in rural law is warning of the importance of understanding how a farm is owned in order to avoid difficulties when planning for the future.
Melissa Haigh, solicitor in the Rural team at regional law firm Napthens, warns that knowledge of ownership can assist with estate, business structure and tax planning, along with development and diversification.
Melissa explains that all farmers and landowners should know what they own, and all tenants should know the basis upon which they are occupying a holding.
This is because, as farms tend to pass down through generations, or be purchased in stages at different times, there may be a variety of ownerships of farms.
Melissa said: “Farmers and landowners should undertake a property audit to identify all property owners and the ownership basis, and all tenants should review the terms of their tenancy.
“For example, some land could be in parents’ names and some in children’s names. It’s important to know who owns what, because only then can landowners know who has the ability to sell or gift assets – during lifetime or on death – or to diversify, and against whom any tax liabilities may be calculated and planned for.
“Where trade is undertaken through a farming partnership, it is also important to know whether property is an asset of the partnership, or owned outside it with the partnership simply allowed to use the property with permission of the owners. There can be considerable differences in the tax implications as a result.
“Another consideration is whether any property is unregistered. An application for first registration could be made to the Land Registry now, as registration can provide a number of benefits, particularly from a future planning perspective.
“Where development or diversification is being considered, a review of the deeds for the property should also be undertaken to ensure there are no limitations on the use of the property for the intended purpose.
“All tenants should know the basis of their occupation and in particular the length of their tenancy. If it is an agricultural succession tenancy, they should consider the likelihood of achieving a further succession or successions.”