As we seem to be emerging from the global pandemic, there are some signs of normality returning after such a turbulent and uncertain time.
Speaking with a number of farming clients, it has been business as usually for many, from the early days of lockdown when many were lambing and calving, to now being busy with harvest and preparing to plough for the cultivation of next year’s cereals.
However, the wider implications of the Covid-19 crisis will inevitably continue to affect businesses and families in the months and years to come.
The financial support offered by the Government has undoubtedly saved many jobs and businesses across all sectors, but with the end of the Furlough Scheme in sight the real difficulties which have been caused by the national lockdown will no doubt begin to show their true colours soon.
Aside from the human cost of the pandemic, the financial reckoning which will be needed to balance the Government’s books may result in a high cost for some to pay.
Inheritance Tax was already under review by the Office of Tax Simplification prior to the crisis, and more recent murmurs around potential changes to Capital Gains Tax have raised concerns that tax reliefs and exemptions which are available on death or on the sale of land may be reduced or even taken away in order to raise revenue for the Government.
Anyone considering any restructuring of the farm business or making gifts of farmland would be well
placed to look at this now in order to take advantage of the current reliefs and exemptions whist they are still available.
For example, a gift of farmland or an interest in a business may attract relief from Inheritance Tax due to Agricultural Property Relief (“APR”) and Business Property Relief (“BPR”).If the person making the gift (the ‘Donor’) dies within 7 years then there will be no Inheritance Tax to pay so long as the recipient of the gift still owns the land and the conditions for APR or BPR still apply. If such exemptions and reliefs were to be removed, however, this will not only limit the possibility of making Inheritance Tax free gifts during lifetime, but could also mean additional Inheritance Tax is payable on death.
At Hay & Kilner, the expert advisers in our Rural Team can assist with all aspects of farm business restructuring and succession planning. To speak with someone to see how we can help please contact Alison Hall at email@example.com or on 0191 232 8345.