More and more farmers are finding they have no-one to take on the farm and are being left with huge and costly decisions about where to go next.
McCartneys partner Jenny Layton Mills said there were a number of things farmers should be putting in place ahead of the decision-making process to ensure the transition was as smooth as possible.
To begin with, make sure land is registered and a will is in place.
“If these are not secured, you will need to set up a meeting with your solicitor to draw up a land registry plan and write a will,” Ms Layton Mills said.
The next port of call is to set up a round-table meeting with the accountant, solicitor and land agent to talk through the various options and tax implications surrounding these.
She said: “Ultimately, everyone’s situation is completely different, which is why it is important to talk things through early and seek the right advice from qualified professionals as soon as possible.”
Choosing the right option can be determined by a number of factors.
What are my options?
“If you want a clean break, selling the farm can be a good option,” Ms Layton Mills said.
A good starting point is to get the farmhouse and land valued, and decide whether to sell by auction, tender or private treaty.
Ms Layton Mills said: “Before selling, speak to your land agent about any development opportunities, or anything you need to do planning wise, prior to selling, to increase the value.
“For example, making a pre-planning application for barns can help increase the overall value.”
She added that, in this situation, capital gains tax would be added, so to factor it into any decision.
“You may be able to get entrepreneur relief on your capital gains tax, which is about 10 per cent relief on the tax rate,” she said. “So if you want to go down this route, discuss it with your accountant.”
For farmers who are not ready to give up the farm completely but no longer want to live in the farmhouse, Ms Layton Mills said letting the farm out as a whole was a good option.
She said it was important to note this avenue does not require having capital to reinvest in a property to move into, but the tenancy could provide a good income to help support retirement.
She said: “You will need to put the farm out to tender or find someone who you would like to take it on.
“This can be done via a farm business tenancy [FBT] agreement, which can be set up by your solicitor. This route has the added value of gaining full agricultural property relief when you pass away.”
This is perfect for those who want to remain in the farmhouse, do not want to work full-time on the farm but still want to be involved.
Ms Layton Mills said: “This means you are able to enjoy retirement while keeping an eye on what is happening on-farm.”
Contract and share farming agreements however must be set up properly to protect the agricultural property relief.
“You need to demonstrate you are still involved in farming activities or decisions. For example, set up regular meetings with contractors to discuss the cropping options,” she said.
The final option is to stay in the farmhouse and let the land out on cropping and grazing licences.
All licences need to be set up with a land agent to ensure both parties are aware of their obligations, said Ms Layton Mills, and farmers need to ensure they keep a record of receipts so their successor can prove they have been farming the property.
“The farmer needs to demonstrate they are spending money on the land, not just merely letting it.
“This means maintaining the land, for example fertilising, providing for boundaries and hedgerows. This work can be contracted out but needs to be paid for by the farmer, otherwise you may lose the agricultural property relief.”