It is not just about retirement. It is about the long-term plan to protect your assets, your business and your family. Annabel Douglas has advice to help farmers stay one step ahead
It is often complicated and sensitive, the result being many farm businesses do not have a plan at all
Do CAP subsidies make up a large portion of your farm income? The agriculture bill had its first reading on 12 September 2018 and set out proposals to replace the current subsidy system of direct payments with a new environmental land management system as part of Brexit.
No longer will farmers be paid according to the amount of land farmed. Under the proposed new system, farmers and land managers who provide the greatest environmental benefits such as improved air, water and soil quality, increased biodiversity, climate change mitigation, cultural benefits and better protection of the historic environment, will secure the largest financial rewards.
There is a planned seven-year transition period to allow farmers time to adjust, and government officials are quoted as saying “we will also provide the smooth and gradual transition that farmers and land managers need to plan ahead”.
Payments may also be available for farmers to invest in new technologies and methods that boost productivity. ‘Delinked’ direct payments would allow businesses to invest, diversify and adapt.
What should you do?
Times of great change can offer great opportunity. Start talking about succession planning – not necessarily retirement but creating a long-term plan for the farming business.
Succession planning can be a neglected topic. It is often complicated and sensitive, the result being many farm businesses do not have a plan at all.
New legislative changes are going to force farmers and landowners to adopt new ways of working. It is therefore essential farmers equip themselves and successors with the necessary experience and skills to adapt.
Business management professor Leon Megginson paraphrased Darwin by saying, “It is not the strongest species that survives, nor the most intelligent, but the one most adaptive to change.”
The fine detail of the new policy direction is still unknown, but in relation to the basic payment scheme (BPS), we advise clients to start preparing their budgets without the direct payment element.
Other key topics to discuss with family, business stakeholders and professional advisers include tax – principally inheritance tax and capital gains tax – pensions and investments, and timing.
If you want to be one step ahead and ensure your business remains viable in the near future and potentially for generations to come, contact the rural professionals at Symonds & Sampson.