Taxing issues for Farmers

Too many farmers still fail to get to grips with vital tax issues, Midland law firm MFG Solicitors has warned.

And it can be extremely costly – even threatening the break-up of an agricultural unit.

Gary Priest, an associate in the tax department, said: "The vast majority of farmers appreciate the position. Anyone who reads the farming press should be aware of it.

"The problem is that many just don't get round to doing something about it. Lots of farmers need to take action."

Mr Priest said there were two main areas which needed to be addressed – inheritance tax and the implications of death, divorce and bankruptcy.

On IHT he stressed the importance of maximising relief.

He said: "It is about making sure the situation is such that they can get every relief available."

The land issue was generally fairly easily sorted out provided it was being actively farmed, but the farmhouse tended to need greater attention.

"If the situation is wrong you won't get any relief at all," he cautioned. "The farmhouse is generally the most valuable asset on the farm."

As to death, divorce or bankruptcy – the sorts of issues people tend to shy away from addressing – Mr Priest warned that failure to prepare for such eventualities could lead to a forced sale of the business.

And, for example, if a son got divorced it could lead to loss of livelihood for other family members.

Mr Priest said farmers needed a plan in place just in case a crisis befell them.

The best approach was to make sure wills were correctly drawn up and often to own the property via a trust, rather than in the name of the individuals.