Farmers could enjoy a buoyant couple of years ahead of Brexit but the industry may face another downturn after 2020, experts have warned.
They emphasised it is vital that farmers re-evaluate their business plans to make the most of the good times and protect against future volatility.
Speaking at a meeting in Newton Abbot, Devon, on Monday (5 December), Andrew Vickery, head of rural services at accountant Old Mill, said farmers were currently benefiting from the weak Pound following the EU referendum. This was making exports more competitive and had boosted the basic payment by 16.5% in 2016. “If currency stays weak we could have two or three very good years.”
However, the uncertainty of Brexit and the 2020 CAP reform meant farmers had to prepare for a future with ambiguous government support, warned Paul Blundell, relationship director in rural services at HSBC.
Given the current straitened times, many rural businesses have been reconsidering their long-term strategy, including succession planning.
However, those who had invested heavily with the use of capital allowances, and who were now restructuring or retiring, could 'crystallise' large profits when selling plant and equipment, warned Mr Vickery. “It could be worth re-evaluating the business structure to reduce the resulting tax liability.”
Any changes in business structure must be reflected in personal Wills, added Ashfords solicitor Jonathan Hickman. “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,” he said.
Having an open dialogue about succession planning could also enable a business to reduce its tax liability, he added. This included identifying assets which qualified for Agricultural and Business Property Relief, and whether the main house was eligible for the new Residence Nil Rate Band (RNRB).
According to the findings of a NFU 2015 Survey, 60% of farm owners have no succession plan in place with a similar percentage believing a succession plan to be important for the future of the business.
“If your whole estate is worth more than £2m the RNRB will be tapered down and above £2.2m it will not be available at all, so it could be worth using lifetime gifts to maximise the tax reliefs available.”
