According to accredited agricultural specialist, Colin Clark of Pagan Osborne, Scotland’s leading legal, financial and property specialists, with only days to go to the end of the financial year, it is not too late for farmers to take one more look at the

By March 21, 2007

He says:
“Farmers can perhaps look forward with more confidence than has been the case in recent years as prices, particularly for cereals, look brighter than they have been for some time.  I hope that that optimism might translate in a more positive financial outlook and with proper tax and financial planning there is no reason why that should not be the case.

“It is possible that planning the financial side of the business could turn out to be one of the most profitable “crops” on the farm.”

Colin suggests the following areas for consideration:

Single Farm Payments: These are now being sold for between 3 and 3.5 times their annual payment value. While the subsidy regime is likely to survive in some form after 2012, it is unlikely that these values will continue in the coming years.  If a farmer is thinking of selling their SFP this is a good time to do so. 

If a person’s annual Capital Gains Tax allowance of £8,800 has not been used before 5 April 2007 it will be lost. However, it could be used to offset any gain made on the sale of SFP or indeed any other assets.  In addition, SFP should qualify for full Business Asset Taper Relief, which in effect reduces the tax payable by 75%, so it is a good time to sell.

Inheritance Tax: It is always worth keeping Inheritance Tax planning in mind.  Gifts of up to £3,000 can be made in each year, with carry back of one year, so if no gifts were made during the last tax year £6,000 can be gifted before 5 April 2007 and another £3,000 on 6 April 2007, which is an easy way of passing assets onto the next generation. 

Making more substantial gifts of assets should also be considered as part of a programme of passing on the family farm.  At the moment the agricultural and business property reliefs are very favourable and with proper planning it is often possible to pass over the whole farm without any Inheritance Tax being paid.  It is possible that some of these reliefs could be changed after 6 April 2007.

IACS Forms: These need to be submitted by 15 May 2007 and many farmers may wish to consider electing to have their payments made in Euros.  This can be an advantage as it avoids currency fluctuations if for example machinery or other inputs are being purchased in Europe or to repay borrowing on a Euro loan where interest rates are lower.

Notes to Editors:
Pagan Osborne is Scotland’s leading legal, financial and property specialists.

With offices across Fife and in Edinburgh, the firm has grasped the opportunities of today’s changing professional market to create a forward looking and modern business. By embracing a customer-focused ethos, Pagan Osborne has pioneered a cohesive, holistic approach to the management, development and ultimate protection of an individual’s personal assets and interests. It brings together legal, financial and property expertise with an understanding of how life’s important choices are inextricably interlinked.

The firm has 11 Partners, including 4 accredited specialists, and over 140 members of staff working within a business-driven management structure. The firm is headed by chief executive, Alistair Morris, with strategic and operational decisions agreed and implemented by an executive board comprising both partners and non-legal directors. The firm holds Investors in People accreditation and a number of legal and business awards.

Jen Symington
Tel: 0131 554 1039

20th March 2007