There are less than six months before the Spring Statement, and changes to the IHT format – based on recommendations originally outlined by the Office of Tax Simplification (OTS) in July 2019 – are likely. “The recommendations were primarily geared towards streamlining IHT administration but may have the secondary effect of reducing some of the favourable reliefs available to farmers,” explains Catherine Vickery, associate director at Old Mill.
“Current IHT legislation can be very beneficial for farmers, giving confidence that they can pass down agricultural business and property assets to the next generation tax free on death,” she adds. “Unfortunately, the coronavirus pandemic has left the Government with a very large debt, so there’s potential that it will implement any OTS recommendations to increase tax revenue.”
So, with the Spring Statement anticipated for March, what can farmers do to mitigate any potential changes?
“Under the existing rules, agricultural land and property qualify for Agricultural Property Relief (APR) from IHT at up to 100%,” explains Mrs Vickery. Other land and property assets, like diversified enterprises, can qualify for up to 100% Business Property Relief (BPR) as part of an overall farming business which is at least 50% trading. “These reliefs can apply on lifetime transfers as well as on death where the conditions are met.”
Transfers on death currently also qualify for Capital Gains Tax (CGT) free uplift so that gains are effectively washed out. Lifetime transfers of agricultural land, property, and businesses which are at least 80% trading qualify for gift holdover relief, meaning gains can be deferred until a later disposal.
However, a key OTS recommendation is to remove the CGT free uplift on death when IHT relief is also available. This would mean that the next generation would inherit the farm at an historically low base cost, leading to higher CGT on any future sale.
“The most tax efficient option has often been for farmers to continue to actively farm and hold onto assets until they die,” says Mrs Vickery. “Now, given speculation about potential changes, the best course of action is to get a succession plan in place as soon as possible and start implementing it.
“Plans need to be arranged based on what is right for you, your family and the farm right now, rather than how things might stand at a later date.”
This means establishing who is taking on the assets and if they have the skills needed to drive the business forward. “Pass over this responsibility while you still can and while you can be on hand to guide and support your successor,” advises Mrs Vickery.
It’s also important to review partnership or shareholder agreements, and consider the handing on of other assets. Additionally, farmers should collate any trust and gift deeds, so that paperwork is on hand to be reviewed.
“Though we suspect the new IHT rules won’t be favourable, farmers need to make use of the rules we have now as these are a current certainty,” says Mrs Vickery. “Succession planning is so easy to put off but it’s a vital tool in safeguarding the future of farming businesses.”
Plan for ‘collaborative approach’ to tackling rural crime issues
THIS week (Mar 9) Police and Crime Commissioner Dafydd Llywelyn chaired a strategic meeting with key stakeholders to identify collaborative opportunities to tackle rural and wildlife crime in the Dyfed-Powys area.
Following a meeting with the Farming Unions in Wales earlier this year, Police and Crime Commissioner Dafydd Llywelyn is keen to establish a Strategic Partnership Working Group with key stakeholders that will aim to identify ways of working collaboratively to tackle some of the rural and wildlife crime issues in Dyfed-Powys.
Dyfed-Powys Police have recently appointed a Sergeant for the Rural Crime Team, and the Police and Crime Commissioner has been keen to consult with key stakeholders to gain an input from partners to support the development of a new Rural Crime Strategy for the Force.
Key Stakeholders that were invited to be part of the strategic group include both NFU Cymru and FUW unions, as well as local authorities, National Parks, RSPCA and many others.
Police and Crime Commissioner, Dafydd Llywelyn said: “I had positive discussions with representatives from both unions earlier this year to highlight some of the rural crime issues in the Dyfed-Powys area.
“One of the priorities identified was the need to take a collaborative approach to tackling rural and wildlife Crime, and the meeting with several key partners today was an opportunity to develop discussions and ideas further”.
Earlier in March, PCC Dafydd Llywelyn published a Rural Crime bulletin, which highlights some of the work that has taken place recently in the Dyfed-Powys area, and cross border collaborative initiatives.
PCC Dafydd Llywelyn noted that this multi agency partnership will aim to build on some of the great work that is already happening, and said; “This meeting today comes a year on from the successful St. David’s Day Conference focusing on Rural Crime that I held at Police Headquarters last year. The last 12 months have been like no other but sadly crime and incidents affecting the rural community have continued.
“Today’s multiagency Strategic meeting was an opportunity to present the new Sergeant for the specialist team, and to discuss a new website that we are developing in partnership with North Wales Police to provide key crime prevention messages to the agricultural industry – the Future Farms Cymru initiative.
“I’m grateful to all partners who attended the meeting today, and I now look forward to take all comments on board as we look to re-energise and refocus the work of the Dyfed Powys Rural Crime Team.”
NFU Cymru ‘responds robustly’ to WG
NFU CYMRU has said that many proposals within the Welsh Government and Defra’s Welfare in Transport consultation will cause significant disruption to livestock transportation in the UK.
In a robust response to the joint Welsh Government / Defra consultation, the union has stressed the significant impact the proposals would have on the livestock and poultry sectors, and raised concerns that if the proposals are implemented, they will fail to deliver any meaningful benefit to animals’ welfare.
Wyn Evans, NFU Cymru Livestock Board Chairman said: “In order to ensure the best possible welfare outcomes, the main priorities should be the animal’s fitness to travel, loading and unloading, driver training and experience, rather than the length of the journey or the external temperature at the time of transport.
“We firmly believe that the current regulations for domestic transport already deliver high welfare, as a result of the standards, cleanliness and adaptability to different weather conditions of transport boxes in the UK. But as an industry, we want to strive for even better. We believe that in order to do that there should be more focus on certified training and providing clearer, sector-specific guidance, particularly during loading and unloading rather than what is proposed in the consultation. Good welfare and healthy livestock go hand in hand; safe arrival at a destination, be that at market or abattoir, must be and is a priority.
“The transporting of livestock is an integral part of UK food production. The suggested changes to journeys based on duration and weather conditions would cause serious delays and disruption, potentially damaging welfare outcomes, while changes to vehicle requirements would add significant costs. It will also lead to many more journeys being made, increasing greenhouse gas emissions, which work against both farming’s and the government’s net-zero targets.
“Turning to the part of the consultation on live exports, we have inputted our views into a proposed NFU assurance scheme, which is detailed in an appendix in the response. This would be extremely effective in delivering welfare outcomes at the same time as maintaining this trade, as assessing the animals’ health and reporting back to producers is a fundamental part of the scheme.”
Richard Williams, Chairman of NFU Cymru’s Poultry Group said: “Looking at the month of January for example, over the last three years on average there were 10 days where temperatures were five degrees or less. If the proposals were implemented to stop transport at this temperature, no broilers could be collected off-farm in those days. If we had a prolonged cold snap; this would have a massive effect on the food chain.
“With any policy developments government makes, it is essential they are based on the latest evidence. We have an industry to be proud of, with world-leading standards, and that includes our current transportation requirements for all farmed livestock.”
Export push for Welsh Lamb
PGI Welsh Lamb will feature in export marketing events in Dubai and Qatar over the coming months, despite Coronavirus restrictions, with the industry aiming to continue a major growth in exports to the Middle East region.
Hybu Cig Cymru – Meat Promotion Wales (HCC) will have a presence at the upcoming Gulfood 2021 trade show during February 21-25 with support from the Welsh Government via the Enhanced Export Fund. The event, which takes place in Dubai, is the first global trade show to take place in nearly a year due to the Coronavirus pandemic. In-market representatives will promote PGI Welsh Lamb to buyers at the Covid-secure event.
The Middle East is an important and growing export market; newly published export data shows that the volume of UK sheepmeat exports increased by 18.3% on levels seen in 2019 and a hefty 368% compared to 2018. HCC helped to secure four new retailers as stockists of PGI Welsh Lamb in Qatar over the last year along with a high-end online retailer in the United Arab Emirates.
HCC’s Export Development Executive, Deanna Jones, explained ‘Welsh Lamb exports have grown rapidly in the Middle East over the last few years and the market now sells Welsh Lamb through wholesale, retail and foodservice.’
‘Whilst we will not be attending any events in person, it is important that Welsh Lamb has a presence at Gulfood 2021 and other trade events as we continue to build the customer base and profile of our products.’
Lesley Griffiths, the Minister for Environment, Energy and Rural Affairs, said: “I am very pleased we have been able to support Hybu Cig Cymru as they continue to promote Welsh produce internationally – particularly given the increasing export value of the Middle East to Welsh Lamb producers.
“While restrictions mean delegates will not be able to attend in person, it is vital that Wales continues to have a presence at trade events such as Gulfood 2021, and I am very pleased Wales will be at the table in Dubai.”
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