Make no bones about it, the Chancellor gave his extraordinarily mild March 3rd Budget through gritted teeth and we can expect to hear a very different tone in the autumn when he will be even more desperate to create a tax regime to pay off the National Debt. This summer will be a unique opportunity to look at our land ownership, farming business, and family succession to batten down the hatches against the inevitable onslaught.

Here are a few thoughts to mull over:-

· Capital Gains Tax

Currently this stands at 20% with a concessionary rate of 10% for what used to be Entrepreneurs Relief (now inevitably with the longer title of Business Asset Disposal Relief).

In addition, you can get Rollover Relief by postponing CGT altogether if you reinvest in another business asset.

Concern here is that the Chancellor may deem it appropriate to level up the rate of this tax to the 40% charged on Inheritance Tax and thus in a stroke, CGT would be doubled. The gain is calculated from a base value related to the date of purchase or if that is before 1982 then the 31st March 1982 is the date for Base Valuation.

This is a long time ago and no allowance is made for the intervening rate of inflation which gives a hefty taxable margin.

What to do?

As the tax falls upon those making a disposal, any farmer or landowner who is contemplating selling up or retiring would be well advised to consider bringing forward their sales programme to the coming summer months; and at present there is a definite shortage in the supply chain.

· Inheritance Tax

My worry here is not so much the rate of tax which is pretty high at 40% but the unique reliefs we benefit from in agriculture. There is currently a 100% Agricultural Property Relief on the bulk of our land and buildings; and to a large extent on our farmhouses. Lurking in the shadows, there is a second rate of 50% APR on agricultural property under the pre-1986 Act Tenancies; and to level down these rates of relief, would strike at the very heart of farming succession which we have protected for the last 50 years.

What to do?

The simplistic answer is that landowners need to reduce the size of their estate and every family’s situation will be different.

Many can achieve a spread of the risk by equalising their estates with the spouse but most of all the emphasis will be on planning for succession.

In our long experience, these conversations rarely achieve an instant conclusion and require many months of debate with our advice and guidance.

If any of the above touches upon your own circumstances, please get in touch for a free initial consultation.

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