Case Study
Case Study
Family farm succession planning
Sector:
Farming
Support:
Business Structure Reviews
Tax Planning
Outcome:
Older generation supported to retire confidently
Business streamlined
Bank borrowings reduced
Security for the younger generation
Capital gains tax reduced
Inheritance tax exposure reduced
What was happening?
The older generation of the farm family was at retirement age. There was a desire to streamline the business so that the younger generation would be able to manage it without placing too much reliance on external labour. With inheritance tax changes on the horizon, there was concern for the financial stability of the farming family.
What needed fixing?
Ownership of the farmland was all in the name of the senior partner (as is typical in farming) but was increasing future inheritance tax exposure and wasn’t reflective of the input of the younger generation.
There was a need to reduce bank borrowings.
Wills and legal arrangements did not yet reflect all members of the family (including non-farming children).
How we approached it
- Supported decision-making to sell outlying land
The proceeds of this were used to reduce bank borrowings. - Provided advice about reducing Capital Gains Tax
As only part of the farm business was being sold, usually Capital Gains Tax would be paid in full. After taking our advice, the family used the opportunity to increase the younger generation’s stake in the business, allowing for Business Asset Disposal Relief to be claimed (reducing Capital Gains Tax). - Helped the solicitor with update of Partnership Agreement
Taking into account future inheritance tax changes, the opportunity was taken to transfer farmland titles into the names of the 3 partners to spread ownership and remove inheritance tax exposure. - Supported with updating Wills to reflect non-farming assets
It was important to protect the legal and financial rights of all members of the family including non-farming children.
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