Tax Planning for Farm & Land Diversification

The publication of the fifth edition of Tax Planning for Farm & Land Diversification is extremely timely as the farming world approaches the uncertainties of Brexit and pure farming profits continue to struggle. There is thus clearly a need for diversification and alternative land use but the resultant tax position must be considered.

Agricultural tax is exceptionally complicated with a large number of valuable reliefs, including farmers’ averaging, herds basis and agricultural property relief. When a farmer begins to diversify, this may put some of these reliefs at risk. This book guides the user through these in a user-friendly way, highlighting both the tax advantages and pitfalls for both pure farming activities and the numerous alternatives to this.

There have been a large number of high-profile tribunals recently that impact the diversified farmer, from the positive result of Graham regarding furnished holiday accommodation to the equally successful case of Vigne for enhanced liveries. Other cases such as that of Ham v Bell highlight an all too common issue in the farming industry and the reluctance to pay for good advice and strong legal agreements. Given that the average farm owner is often in their 70s, 80s or 90s, this can lead to a multitude of problems, particularly with regards to land ownership and capital taxes, and the large number of farming family dispute cases that have arisen over the last few years attests to this.

These cases have focused on the need for evidence and the book emphasises the importance for professionals to have a full understanding of all this involves. For example, the accounts of the farm are not just a dull document, rather they can show how the farm is perceived to be owned through the capital and land capital accounts. Despite the uncertainty over Brexit and lack of farming profit, farms have retained and increased their value. With such valuable assets there can be concerns over capacity and the need for a Lasting Power of Attorney or undue influence on members of the farming family trying to influence the Will. Protecting these assets requires careful collaboration from all professionals, who in turn must be protected against a case for negligence.

High land values also give rise to potential development opportunities for farmers and landowners, especially with the lack of housing constantly hammered home in the national press. Again, the transition to ‘growing’ houses instead of crops, or indeed the sale of the farm completely needs careful tax planning as the capital gains that arise can be eye-watering.

With more and more diversification opportunities, farms also appeal to many non-farmers or ‘lifestylers’ who, should they have the energy, enthusiasm and funding to do so, can embark on a new business venture. There are also the tax advantages should they have capital gains to shelter or wish to explore inheritance tax efficient assets.

The book embraces the conventional areas of farming such as haymaking and woodlands, as well as all areas of imaginative diversification, from glamping and the use of Airbnb to the tax position on shooting, fishing and other country pursuits. Each of these is discussed and woven into the need for excellent tax and legal planning. It is a must-have for land agents, accountants, tax planners, solicitors, farming and non-farming family members; all of whom have the ultimate aim of protecting either their client or themselves, protecting their parents or their involvement or share of the ownership. Even those with an ambition of owning a farm or smallholding one day need to make sure that the finances and tax considerations are all looked at as part of the interesting web of rural life.

The author, Julie Butler, is married to a farmer and owns farm and woodland herself. As a prominent tax writer and lecturer she is able to integrate the practical side of her farming experiences and passion for the countryside with the tax considerations of farm ownership, farm progression and farm development. With a client base from all over the UK, she approaches subjects from a nationwide view, looking at the needs of different areas and their particular economic strengths, covering both the industrial side of farming, as well as the lifestyle.

Written by Ellie MacKenzie

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