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.”
Roy Noble joins campaign to stop mass tree-planting on agricultural land
ONE of Wales’ best-loved broadcasters has joined countryside campaigners in calling on the Welsh Government and Natural Resources Wales (NRW) to stop mass tree-planting on prime agricultural land, while also urging them to curtail ‘outside interests’ and ‘juggernaut companies’ from doing the same.
Roy Noble, who has been a constant feature on Welsh radio and TV for decades, said in a ‘personal plea to high officialdom’ that he had “real empathy” with farming families who “are out-bid” for land purchases by “financial combines”, who use it to offset their carbon emissions elsewhere by planting trees. He accused them of having “no empathy for, or real understanding of farming or the countryside”.
Appealing to the Welsh public, the OBE recipient argued that taking away agricultural land for tree planting risked limiting Wales’ ability to be self-sufficient and threatened food security.
He said: “The tragic and awful events unfolding in Ukraine and the world’s extreme financial strain currently impacting on our country should focus the mind and underline priorities, one being self-sufficiency. It stands at around 60% in Wales at present I believe, but experts agree, from the farming world and beyond that it could be vastly improved with official support. Of course, we cannot produce everything, but a greater percentage is a realistic goal.”
Mr Noble, who worked as a teacher before embarking on a career in broadcast, argued that tree planting has benefits when done in the ‘right place with the right trees’ stating: “Without a doubt, planting trees is regarded and accepted as a way to combat the climate emergency and global warming, but ‘right trees, right place, right effect’ is, I feel, an acceptable mantra in that process. Planting on productive, rich arable land, surely is not, and, if done, the implication and effect will last generations.”
He pointed at rural communities in the Cothi Valley, Carmarthenshire, where his ‘maternal lineage lived for many generations’ saying: “Many of the farming families, in all areas of Wales affected, are rooted in their land, their hallowed ground attached as it is to their soul and their very being. Many likely go back to the very early farmers. That heritage deserves recognition and respect, for all they have contributed and will continue to do, feeding a need, in food production, co-operating in climate crisis initiatives, and working with government and agricultural bodies on sensible paths.”
The broadcaster’s intervention comes as a petition, launched by Countryside Alliance Wales and now in its third week, continues to collect hundreds of signatures by the day. The petition, which is online, calls on the Welsh Government and NRW to ‘stop purchasing productive farmland to plant trees which threatens our fragile rural communities, heritage, culture and the Welsh language’.
It further adds: ‘We are deeply concerned about the number of companies purchasing productive farmland for tree planting to offset their carbon emissions and feel that the Welsh Government should further protect our communities from this practice’.
The petition was launched after a Countryside Alliance Freedom of Information request revealed the Welsh Government has spent a staggering £6million buying land with taxpayers’ money.
In February, the Welsh Government announced that new memorial woodlands would be created at three separate sites, including a section of farmland at Brownhill in Carmarthenshire’s Tywi Valley. The plans involve planting at least 60,000 trees, sparking fears that valuable agricultural land will be lost.
In the Carmarthenshire village of Cwrt-y-Cadno, Frongoch Farm was sold earlier last year to Foresight Group – a multi-billion pound private equity firm based in The Shard. It plans to plant thousands of trees across the valley, prompting locals to launch a fightback, arguing that the afforestation will be largely made up of conifers that could damage soil and have a negative impact on the landscape.
There are also multiple reports of farmers being targeted through cold-calls made by agents working for investors wanting to buy farmland to plant trees.
Rachel Evans, Director of Countryside Alliance Wales said: “It is truly a great honour to receive the support of Roy Noble in what is an incredibly important campaign. We cannot stand by and watch productive agricultural land get swallowed up for tree planting initiatives that while well intentioned, have long term, negative, irreversible consequences for farming families in Wales and threaten our ability to produce our own food. Every signature represents a voice and alongside Roy Noble, we urge the Welsh public to ensure their voices are heard by signing our petition today.”
The online petition can be found here: Take action: Save our Welsh farmland (ac-page.com)
Building on European funding successes vital to future of rural Wales
BUILDING on the benefits significant European funding has brought to projects in rural Wales and the commitment of communities who have delivered them will be crucial as we look to the future.
This is the message from Rural Affairs Minister Lesley Griffiths ahead of a 200-plus guest event beginning today at the Royal Welsh Showground in Builth Wells to celebrate the work of rural Wales.
For decades Wales has benefitted from support through the European Union’s Rural Development Programme (RDP). With the UK’s exit from the EU, this support is coming to an end, and the Welsh Government is now developing a truly Welsh approach to supporting the rural economy.
Activity through the RDP has been extensive, diverse and successful. This event, which includes a number of speakers and exhibitions, provides an opportunity to recognise and praise people’s work.
RDP funding has supported a project at Caswell Bay on the Gower Peninsula to help make the beach more accessible, inclusive and accommodating for those with physical and learning disabilities.
The support has helped create new facilities consist of a self-contained unit, complete with hoist, shower and changing bed and it is the first Changing Places facility on Gower.
The project has made a difference to thousands of residents and visitors with severe disabilities, who now have access and can enjoy the waters at Caswell Bay and have a dignified experience when changing and washing in a facility which is fit for purpose and meets their complex needs and requirements.
In Wrexham, the RDP supported the North Wales Wildlife Trust to initiate the ‘Biodiversity means business’ project. Through a collaborative approach involving businesses, landowners, farmers and community groups, the scheme has helped protect and improve ecosystems, habitats and species.
Adrian Lloyd Jones, North Wales Wildlife Trust Living Landscapes Manager said: “I am delighted to watch the unique partnership between the industrial and ecological aspects of this area strengthen day by day. While a business needs a sound foundation to grow, so does an ecosystem.
“This project, with business and conservation working together, has given back to nature and allowed all forms of life,be they human, flora or fauna, to benefit and thrive, making life better for future generations.”
At the beginning of the RDP programme, the Welsh Government set out to boost the productivity of the farming, forestry and food sectors. To date, this has helped create nearly 2,400 new jobs and protect more than 2,150.
The aim was also to create 34,000 training places to foster innovation, knowledge transfer, co-operation, more sustainable farming practices and stronger rural businesses. This has almost tripled, with in excess of 90,000 people trained through Farming Connect, food centres and support for the timber sector.
Ahead of the Celebration of Rural Wales event, Rural Affairs Minister Lesley Griffiths said: “Our rural communities play a vital role in Welsh life and we have a lot to be proud of.
“European Union funding has helped us protect and restore thousands of hectares of our habitats and we are also seeing biodiversity in our grasslands starting to stabilise and, in some areas, improve.
“All of this and more could not have been done without the commitment and determination of Welsh farmers, landowners, and the rural workforce.
“We face a number of challenges as the impacts of the decision to leave the European Union, the subsequent free trade agreements, the Covid-19 pandemic and now the conflict in Ukraine are being felt across the board.
“We are grateful to the European Union for their support, and we must build on our achievements through the Rural Development Programme as we develop a bespoke Welsh approach to meet the challenges and opportunities ahead of us.
“In April, I announced an initial £227m over the next three years to support our rural economy. This is only the start and we know more needs to be done, and further support will be provided as we transition to Sustainable Farming Scheme and build a new, green economy responding to the nature and climate emergencies
“Working together has always been a real strength across our rural communities and sectors. This will only become increasingly more important as we deliver towards the challenges and opportunities ahead of us.”
Carmarthenshire farmer admits causing slurry pollution
A CARMARTHENSHIRE farmer has admitted failing to comply with an order to improve his slurry storage and causing slurry pollution in two nearby rivers during a hearing at Llanelli Magistrates’ Court.
Noel Richards, a farmer responsible for the running of Coedmoelon and Rhydolau farms, pleaded guilty to all three offences at Llanelli Magistrates’ Court on Friday, April 22.
He was ordered to pay £2,153 in fines, a further £2,344 in court costs and a victim surcharge of £190.
Matthew Lowe, Environment Team Leader, of Natural Resource Wales, said: “Mr Richards self-reported one of the slurry incidents to NRW, which was the most appropriate and responsible thing to do to minimise the impact of the pollution on our land and waterways.
“However I must stress that both incidents could have been prevented had Mr Richards taken the required steps to adhere to regulations around the safe storage of slurry.
“We work closely and positively with farmers to help them comply with regulations and minimise the risks of causing agricultural pollution. Where farmers ignore our requests and put people, nature and our natural resources at risk, we will prosecute.”
In February 2018 Mr Richards was issued with a notice to carry out required compliance works to a slurry lagoon at Coed Moelon Farm to ensure it adheres to the required standards of the Water Resources (Control of Pollution) (Silage and Slurry) (Wales) Regulations 2010.
The notice has not been complied with to date.
On 22 September 2020, NRW received a report of slurry pollution in the stream running into the Afon Dulais.
An Environment Officer attended the site and witnessed the stream discoloured along with an agricultural odour. The officer traced the pollution back to a dirty water tank at Rhydolau Farm.
Mr Richards was cooperative and the pollution was contained as soon as the source was identified.
On 3 December 2020, NRW received a call from Mr Richards self-reporting a pollution incident where slurry had entered a tributary of the Afon Gwendraeth Fawr.
Mr Richards explained that they had spread slurry the week before, but the recent rainfall had washed the slurry into the watercourse. An Environment Officer attended the site and found the stream discoloured with large amounts of foam.
The officer traced the pollution back to a field belonging to Coed Moelon Farm that had been spread with slurry.
Matthew Lowe added: “I urge farmers and contractors to be vigilant to help prevent polluting our waterways. Carry out regular checks on slurry levels and storage infrastructure. Only spread slurry when conditions are right, for example, not spreading at times when rain is forecast over the next 24 hours, when the ground is saturated or when the ground is frozen hard.
“We recognise that sometimes things do go wrong, but we urge farmers or contractors who know they have caused pollution, to report it to NRW immediately by calling 0300 065 3000. The sooner we know about it, the sooner we can work with them to try and reduce the impact on the environment.”
To report a pollution incident call NRW’s 24-hour incident hotline on 0300 065 3000.
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