Farmers review wills to avoid digging deep
In light of potential market instability, rural businesses are being encouraged to review their long-term strategies, including succession planning.
Experts have warned that although farmers could be set to benefit from a stable few years prior to exiting the EU, the industry may decline after 2020. They highlighted the importance of reviewing existing business plans to maximise the current market landscape and safeguard against forecasted unpredictability.
Commenting on the fact that farmers were making the most of the sterling’s weak value was Andrew Vickery. The Head of Rural Services at accountant, Old Mill mentioned the reduced pound had led to exports being more competitive as well as boosting the basic payment by 16.5% in 2016:
“If currency stays weak we could have two or three very good years.”
Following the EU referendum decision and the 2020 CAP reform, however, farmers have been forced to equip themselves for a future with ambiguous government backing.
Relationship Director in rural services at HSBC, Paul Blundell, commented on the constrained outlook leading many rural businesses having to revise their strategies in the long term; strategies which succession planning forms a key component of.
“It’s really important to look ahead and have those conversations now – don’t wait until 2020 to start planning,” he stated.
“You need to get your business in a shape that you can farm the way you want to without financial support.”
Mr Vickery brought attention to those who were now restructuring or retiring and had used capital allowances to heavily invest, warning that large profits could be ‘crystallised’ by selling plant and equipment:
“It could be worth re-evaluating the business structure to reduce the resulting tax liability.”
Highlighting the need for wills to reflect any structural business changes was Jonathan Hickman. The Ashfords solicitor stated: “A poorly drafted will can cause just as many problems as not having one: If you change your business structure you will need to review your will.”
60% of farmers are lacking any sort of succession plan according to an NFU 2015 Survey, with a similar proportion feeling the possession of a plan was important for the businesses’ future.
The benefits of updating or even reviewing a will should not be overlooked, given the potential advantages a small alteration could make.
Keeping up to date with any legislative changes and having continual communication in regards to succession planning may mean a business could reduce its liability for tax, for example. Hickman stated that this could include identification of assets eligible for Agricultural and Business Property Relief as well as whether the main property could qualify for the new Residence Nil-Rate Band (RNRB).