Effective tax planning

Just as with any business, every decision and transaction made by farming and rural businesses will have tax implications.

The dedicated tax advisors at Nicholsons have many years’ experience of working with a wide variety of businesses in the agricultural sector, and can advise on the most tax-effective route to take.

This includes making the most of the reliefs available to minimise your inheritance tax liabilities, as well as how to make the best use of capital allowances when diversifying your business and on the purchase of plant and machinery for the farm. We can advise on the purchase, sale and development of property and land, ensuring each transaction is carried out as tax-efficiently as possible.

Succession matters

When passing on the family farm to the next generation, you will want to make sure you pay as little inheritance tax as possible.

Agricultural Property Relief (APR) can help you pass on some or all of the property free of tax, either during your lifetime or in your will. While this can enable significant savings to be made, there are also conditions attached to the relief:

• The land in question must fall within the definition of agricultural property
• It needs to have been in the possession of the owner for two years if they farm it themselves, or seven years if the land is farmed by someone else
• The farmhouse attached to the land must be occupied for agricultural purposes and be in keeping with the holding

In particular, this final condition can result in significant issues as HM Revenue & Customs looks to increase its tax haul.

One solution is to transfer ownership of the farm to the next generation prior to death. In addition to the inheritance tax benefits, this can also result in the deferral of any gains made during the handover process.

We have specialists that have advised a significant number of farming businesses on succession planning ensuring they make the most of the reliefs available, so they can enjoy their retirement.