Next generation pays for farming succession
Farm succession is causing major financial issues for the succeeding generation, according to experts.
The complex rules within agricultural inheritance means professionals are required to provide more catered and detailed advice to their farming clients, to help avoid surging tax bills from the Inland Revenue. With 60% of farmers not having a plan in place for their business and estate, specialists are urging will writers, practitioners and estate planners to ensure arrangements are clear and thorough.
Having a succession plan in place as early as possible could potentially save families hundreds of thousands of pounds in the long run. Not only is this due to the inheritance tax (IHT) savings, but also the avoidance of potential costs for future disputes.
It is advised that clients must establish beneficiaries and what they will bequeath; taking into consideration those who contribute towards the livelihood, those who may reside on the estate, as well as the financials of the business itself. This ensures nobody is left behind and successors gain their rightful share of the estate and/or business once it’s passed on.
With the new residence nil rate band (RNRB), tax-free allowance being introduced from April next year, this could vastly improve the outlook for farming succession. Should the farm owner have lived at some point within the farm property, provided the estate is worth up to £2 million, it can be passed on to a direct descendant or spouse with the application of the RNRB. Every qualifying individual will be given a threshold of £100,000, which is expected to increase to £175,000 by spring 2020.