farm succession planning simpkins edwards, stags and toller beattie
TRANSCRIPT
Agricultural Update for Farmers and Landowners
Barnstaple
Tuesday 21st October 2014
Mark Neason BSc (Hons) MRICS FAAV
Stags Professional Services
Permitted Development
The West Country is Stags Country stags.co.uk
The West Country is Stags Country stags.co.uk
Town and Country Planning (General Permitted Development) (Amendment and Consequential Provisions) (England) Order 2014
• 6th April 2014
• Agricultural buildings to dwellings, up to 3 units (their combined floor area must not exceed 450m2)
Permitted Development
The West Country is Stags Country stags.co.uk
• Prior Approval for Change of Use - Class MB(a)
• Prior Approval for Building Operations - Class MB(b)
However this can be done through ONE application
One application can include all 3 buildings
Permitted Development
Process:
- 56 days from receipt of application to consider and approve or refuse
- No decision = deemed consent
- Right to appeal a refusal
stags.co.uk The West Country is Stags Country
Permitted Development
The West Country is Stags Country stags.co.uk
The Exclusions
Designations
Conservation Area
Area of Outstanding Natural Beauty (AONB)
National Park
World Heritage Site
Statutory Listing
Site of Special Scientific Interest (SSSI)
Safety Hazard Area or Military Explosives Storage Area
Scheduled Monument
Permitted Development
The West Country is Stags Country stags.co.uk
Permitted Development
Building must pre-date 20th March 2013
Building must have been in agricultural use on 20th March 2013 or last used for agricultural purposes
Maximum internal footprint to be converted = 450m2
3 Dwellings per established agricultural holding
10 year bar on erecting new buildings under PDR
Partial demolition
The West Country is Stags Country stags.co.uk
Permitted Development
Areas to be addressed:
• Transport and highways impacts;
• Noise impact;
• Contamination risk;
• Flooding risk;
• Location and siting needs to be practical and desirable;
• Garden size.
The West Country is Stags Country stags.co.uk
Under offer above guide
The West Country is Stags Country stags.co.uk
Permitted Development
Barn at Nr Templeton, Tiverton in 5.5 acres sold at auction £230,000.
The Scenario
Mervyn Janet
Chris Chloe Lauren
The West Country is Stags Country stags.co.uk
Permitted Development
• Mother and Father own a 300 acre dairy farm. They live in the farmhouse.
• Son, Chris, farms in partnership with his Mother
and Father but owns nothing in his own right. He rents a small cottage in the local village with his pregnant wife, Lauren.
• Daughter, Chloe, is a Nurse and lives in town with
her fiancé.
The West Country is Stags Country stags.co.uk
Permitted Development The Scenario
Map of the farm
Farm Lane
Building B Farmhouse
Building C
Building D
Slurry Store
Modern Agricultural Buildings & Parlour
Building A
The West Country is Stags Country stags.co.uk
Permitted Development
The West Country is Stags Country stags.co.uk
Permitted Development Building A
No apparent
major issues.
Objectives:
Do you want to sell it away or rent it out or is it for a family member or worker to be nearer the farm?
Map of the farm
Farm Lane
Building B Farmhouse
Building C
Building D
Slurry Store
Modern Agricultural Buildings & Parlour
Building A
The West Country is Stags Country stags.co.uk
Permitted Development
The West Country is Stags Country stags.co.uk
Permitted Development Building B
Issues:
– Location: close to the farmhouse (possible depreciation in value to both due to close neighbours, wouldn’t split easily).
Permitted Development
stags.co.uk The West Country is Stags Country
Inspiration?
Map of the farm
Farm Lane
Building B Farmhouse
Building C
Building D
Slurry Store
Modern Agricultural Buildings & Parlour
Building A
The West Country is Stags Country stags.co.uk
Permitted Development
The West Country is Stags Country stags.co.uk
Permitted Development Building C
Issues:
– Access
Permitted Development
stags.co.uk The West Country is Stags Country
APPROVED!
Map of the farm
Farm Lane
Building B Farmhouse
Building C
Building D
Slurry Store
Modern Agricultural Buildings & Parlour
Building A
The West Country is Stags Country stags.co.uk
Permitted Development
The West Country is Stags Country stags.co.uk
Permitted Development Building D
Issues:
– Noise
– Practical or desirable location and siting.
Permitted Development
stags.co.uk The West Country is Stags Country
The possibilities are endless…
The West Country is Stags Country stags.co.uk
Permitted Development
Thank you for listening.
Mark Neason BSc (Hons) MRICS FAAV 01823 653424
Mary Jane Campbell
Partner, Simpkins Edwards LLP
Tax and properties
Tax and planning / planning for tax
What do you want to achieve?
Convert to residential properties where
possible?
Provide on-farm accommodation for
Chris?
Provide for Chloe?
Timing?
Tax planning
About maximising reliefs
Be clear who owns what
How much did the assets cost (CGT)
What have they been used for / by
whom?
Planning changes – think tax as well as
practical aspects
Taxes
Taxes (and reliefs) to consider
Capital gains tax (rollover, holdover,
PPR, ER)
Inheritance tax (APR, BPR)
VAT
SDLT
Income Tax (?)
On-site accommodation for Chris
Develop building B for Chris?
Give Chris farmhouse and develop building B for
Mervyn and Janet?
Gift building B to Chris (claim holdover relief)
Chris uses DIY house builders scheme to
recover VAT
IHT – Potential Exempt Transfer (7 year clock)
No consideration: No SDLT
On-site accommodation for Chris
If subsequent house swap:
No capital gains tax if PPR relief applies
Potential SDLT charge for both
properties(?)
APR relief on farmhouse can be
maintained
No VAT implications
Providing for Chloe
Needs to be practical – assume Chloe not
interested in a building next to a slurry
store!
Might be interested in building A? Let’s
say she doesn’t want to live on the farm.
Challenging to find a way of making gifts
without compromising farm.
More of Chloe later………
Financing
How to finance the developments and / or
gifts?
Can you borrow against future rental
income?
Sell an asset – e.g. building A for 3rd party
sale?
Sell as a plot or develop?
Develop building A for sale
Partial Exemption VAT scheme
Ability to recover input VAT on exempt
supplies
Limited to £7,500 or maximum of 50% of VAT
Reduced rate VAT (5%) for work and materials
supplied by a building contractor.
Who will do the building work?
Develop building A for sale
CGT – payable
Currently 2 partners therefore 2 x Annual
Exemptions (£11,000)?
Partnership asset first? (extra AE)
But – implications of trading
Sell plot prior to development
Rollover
Gain made on disposal of building A prior
to development
Re-invest in developing building D for
farm-workers accommodation or C as a
FHL?
Is conversion of building D
commercially sensible?
Convert building C to FHL
Who will run the FHL?
When to transfer to Chloe? If before
conversion could gift cash to pay costs
Outright gift or use a trust?
Control of assets
No IHT on death if survive gift(s) by seven
years
Succession planning
Retain assets or gift during lifetime
Should Chloe get assets or cash/ when? Plan
now – especially for cash option.
Will current favourable IHT reliefs remain in
place?
Lifetime transfer into trust could “bank” reliefs
without losing control.
Mary Jane Campbell
Partner, Simpkins Edwards LLP
01392 211233
Removing Agricultural Occupancy
Conditions from Dwellings
Robert Gross - Toller Beattie, Solicitors
Agricultural “need” is
The justification for a new dwelling in the
countryside.
But circumstances change.
40
The Current Wording
The occupation of the dwelling shall be limited to
a person solely or mainly working, or last working,
in the locality in agriculture or forestry, or a widow
or widower of such a person, or any resident
dependants.
41
Methods to Remove:
1. Planning Application – on the merits
2. Application for a Certificate of Lawfulness –
breach for a period of 10 years
3. A technicality
42
A Normal Planning
Application
To prove:
The need for an agricultural dwelling no longer exists:
• On the holding and
• In the locality
Usually by:
• Suitable marketing
• For a “reasonable period”
• At a “reasonable price”
43
Application for a
Certificate of Lawfulness
Breach of Condition for 10 years
Law and Evidence
Not the merits
Not planning policies
44
The wording of Conditions
has changed over the years
• In agriculture
• Solely or mainly in agriculture
45
“Last Working” in
agriculture
• Before retirement
• Before ill health or unemployment
Not your “last job” before your current job.
• Have you really “retired”?
46
In the Locality
• The relatively immediate “locality”
• Various interpretations
47
In “agriculture”
e.g. Not rearing pheasants primarily for shooting.
e.g. Not rearing trout primarily for fishing
48
• Widow or Widower
• Resident Dependants
49
Effect of the Certificate
A Certificate of Lawfulness “certifies” that the breach has become
lawful:
• On the date of the application
• The breach becomes lawful, but the condition is not removed
• The condition can be “resurrected” if someone again complies with
the strict wording or one breach ceases and then a new breach
begins
50
Technicalities
• Not built in accordance with the permission:
- In the wrong place
- Not in accordance with the plans
- Pre-conditions not complied with
51
Recent New Rules
• If “deliberately concealed”
And “just” in all the circumstances
• Or “deception
52
53
54
Partnership Act 1890
That’s what you get if you don’t agree
something else!
Easy to get into partnership
Harder to get out of it
Before you go into partnership think the
unthinkable and plan for the unacceptable
Plan your exit strategy
What is it going to be a partnership of:
- Everything
- Just the business
- Or farmland and the business
Valuation going in and valuation coming out
Get it agreed.
Write it down and update it when you agree
changes