Realising the potential from tourism and rural estates, the changing landscape surrounding inheritance tax, the latest Government-led ‘Making Tax Digital’ initiative, and opportunities in the UK housing, development and strategic land market – all of which will change the way farmers, landowners and estates need to work – were amongst the topics discussed at last week’s Autumn rural landowners briefing organised by Savills Lincoln.
The event, which took place at Stoke Rochford Hall near Grantham on Thursday 8 November saw over 100 landowners, farmers and professionals gather to hear updates from experts at Savills, Roythornes and Ellacotts talk about topics effecting the rural sector as they look ahead to uncertain times.
Simon Foster, head of the commercial heritage consultancy team at real estate advisor, Savills explained how farms and rural estates can adapt and talked about the benefits and pitfalls of diversification on farms and rural estates, highlighting that a growing number of businesses are choosing to move into the tourism and event sectors including weddings, events, filming and photography, and holiday accommodation in order to meet with the needs of the modern day consumer.
Dr Lucy Greenwood, research analyst at Savills was also in the spotlight to outline the findings of the latest residential property forecasts, which outline that homes in the East Midlands are expected to see over four times more growth than those in London over the five years to 2023, at 19.3% and 4.5% respectively. She explained that despite political uncertainty surrounding Brexit, transactions remain stable at 1.2m per year and highlighted the need for more homes to be built as the Government target to build 300,000 new homes per year is not being met, currently standing at around 220,000 and providing opportunities for landowners.
Jarred Wright partner at Roythornes Solicitors discussed how changes to the current inheritance tax system, which has existed in its present form for 32 years could impact landowners and businesses. He explained how following Philip Hammond’s call for a simplification review of inheritance tax at the start of 2018, a report has been handed into the Treasury which should be published soon. The outcome is uncertain, but any changes could present problems for landowners and landlords, particularly if Agricultural Property Relief is abolished.
Jarred was followed by fellow partner at Roythornes, Julie Robinson who highlighted that farm businesses should be structured in a way which does not jeopardise the agricultural reliefs which are available. Julie also looked at the recent Agricultural Bill, stating that under current plans claimants will no longer need to be farmer in order to benefit from delinked direct payments; the IHT implications of post Brexit schemes have still to be explored.
Taxation rules, benefits and constraints were also explored by John Thame, head of agriculture and estates at chartered accountants and business advisers, Ellacotts. John gave an update on Capital Gains Tax and explained how recent changes made to Entrepreneurs’ Relief announced by the Chancellor mean that there is an extension of the qualifying holding period from one year to two years.
This means that shareholders within agricultural, or indeed any businesses, need to consider their position at least two years in advance of any potential transaction to ensure their position is protected. He also talked about the benefits of setting up a partnership rather than acting as a sole trader in order to protect a business for the future.
Ann Bibby gave an insight into Family Investment Companies (FIC) and the benefits of taking this route over a Trust within a family business when it comes to taxation and powers. However, she did warn that choosing this route means accounts have to be filed at Companies House, potentially creating more work.
Ann also provided a preview of the new Government initiative, ‘Making Tax Digital’, which will come into force from April 2019 for those over the VAT threshold of £85,000. Below this threshold, it is likely to come into play in April 2020 at the earliest, but it will eventually replace Self-Assessment so it needs to be taken into consideration now.
Johnny Dudgeon, head of Savills Lincoln who chaired the event, comments: “It is quite clear that there are uncertain times ahead, but uncertainty fuels opportunity and this seminar provided a chance for local landowners to gather pragmatic advice on how to drive their businesses forward whilst learning about the important changes coming into play regarding taxation and how to protect their futures for themselves and their families. There are so many factors to take into consideration and this annual event aims to provide a rounded summary spanning various sectors which guests can take away and put into practice.”