NEWS LETTER
Capital Gains Tax Reform & Entrepreneurial Relief
The Chancellor has given further details regarding the proposed reforms to Capital Gains Tax (CGT) which he first announced in last Octobers Pre-Budget Report. A newly proposed ‘Entrepreneurs’ Relief’ of 10% on the first £ 1,000,000 of gains in a taxpayer’s lifetime is to be available for the gain on the disposal of trading businesses and shares in certain trading companies.
The removal of Taper Relief and Indexation Allowance is confirmed with effect from April 6th, at which time the standard rate of CGT will be reduced from 40% to 18%. Although other reliefs against CGT such as Rollover, Holdover, Principal Place of Residence Relief and Annual Personal Allowances will continue, the changes could have significant implications for farmers looking to retire, sell or transfer business assets.
As sales before April will be under the present CGT rules, some may wish to create a disposal by gifting to a family trust or member that then uses holdover relief. This might be most relevant where the land now has significant value (as for development prospects).
Final details are awaited, and will not come until the Finance Act is published after the March Budget, but it appears that the definition of business assets may be narrower than the present definition, though few of these changes will apply to disposals by companies as Corporation Tax will retain full and continuing indexation against general inflation.
Moore Allen & Innocent has a tradition and reputation for working to help our Clients achieve their business and personal objectives through providing sound, practical and cost effective service. As rural property transactions become ever more complex it is important to employ professionals who can guide you to a successful sale or purchase.
We specialise in the marketing and transfer of all kinds of rural properties from farms and farmland to country houses, equestrian, woodland and rural development properties. If you would benefit from timely advice contact Mark Hill on 01285 648 105.
An End to the SPS 10 Month Period – but Beware the Tax Timing
The EU Council of Ministers has agreed the end of the Single Payment Scheme 10 Month rule, a move which is likely to affect this years Single Payment Scheme.
Precise legal details are awaited, but it is understood that the eligibility test will only have to be met on a single day. In the UK this date is likely to be May 15th but this is still to be confirmed.
The party in occupation of the land on this single date will be eligible to match it against Entitlements held, but they will then be liable for Cross Compliance on the land for the entire Scheme year (January – December). It is therefore critical for the SPS claimants to have an appropriate indemnity agreement in place with any other party who may occupy the land during this period.
This change in the rules will also have a bearing where land is transferred during the year and early, competent, professional advice on the many issues that can arise is recommended.
Finally, the change could have significant implications for the calculation and payment of the income tax liability arising from the receipt of SPS. On the present analysis of the taxation of the SPS it is generally taken as the end of the claimant’s ten month rule period that is the date for assessing when the Single Payment should be taken into account for tax purposes.
It seems likely that the end of ten month rule will bring that date forward to the date the claim is submitted – presumably May 15th in most cases – and so bring forward the date at which it falls to be taxed. The impact of this will vary in part according to the year end of each taxpayer. Once again, professional advice taken early on is recommended.
SPS Entitlement Statements and Trading
The RPA is currently in the process of posting out Entitlements Statements to Single Payment Scheme claimants for the 2007 scheme year. This statement contains the latest data on the Number and Type of Entitlements held, and it is important to check these carefully, especially for those claimants who have transferred Entitlements in or out of their business since 2005.
With the April 2nd deadline for 2008 Entitlement transfers, now is a sensible time to consider your requirements for the 2008 scheme year. In cases where farmers aren’t claiming Entitlements over their full area of eligible agricultural land, claimants should be aware that cross compliance rules still apply to all eligible agricultural land on that holding, and not just the areas that are being claimed for SPS. Therefore farmers who have more land than Entitlements, or conversely those who have sold / given up land and hold more Entitlements than available eligible land, should consider trading Entitlements to maximise returns.
In most cases, the RPA require six weeks prior to May 15th to transfer Entitlements, although with-land transfers should be submitted six weeks prior to April 30th. We currently have several lots of Entitlements available and demand for more. Contact Stuart Milsom on 01285 648 107 for further details.
Rent Reviews – What Will You Do ?
Following many years of relatively static agricultural commodity prices and little change in farm rent levels, we are now aware of a considerable number of either notices either having been served to review farm rents in 2008, or parties considering doing so this year.
We can help with all aspects of rent reviews whether for traditional Agricultural Holdings Act (AHA) tenancies or Farm Business Tenancies (FBT). Agricultural tenancy rent reviews are a highly technical area and legislative regimes differ between FBT and AHA tenancies.
Sustained increases in arable prices may well push arable land rents up, but conversely, increased feed costs could be a factor in lowering certain livestock enterprise rents – especially when taking account of other price rises such as fertiliser, fuel, etc.
The best place to start for any review is with the production of a comprehensive farm budget. The agricultural team at Moore Allen & Innocent has a wealth of experience to help you with this, in addition to providing comparable rental evidence from our extensive local knowledge of the rental market.
For professional and objective advice at any stage from initial budgets through to conducting negotiations or even arbitration, we can help. For further information and an informal discussion contact Chris Graham or Robert Young on 01285 651 831.
Local Authorities are Looking for Housing Sites – Plan Ahead
Local Authorities are currently in the process of preparing the next generation of Local Plans. These will be known as Local Development Frameworks (LDF’s) and, in most cases, will cover the period up to 2026.
As part of this, Authorities are currently carrying out Strategic Housing Land Availability Assessments (SHLAA) to identify suitable sites to allocate for housing development within their next LDF’s. They are therefore inviting landowners to put forward sites that could be suitable for housing. This can be done, at this stage, simply by supplying a plan of the proposed site to the Local Authority.
The timescales for proposing sites vary between Authorities with most currently accepting suggestions. Of note, is that Cotswold District Council is asking for potential sites to be put forward by the beginning of February. Closing dates for other Authorities can be obtained by telephoning us, or the relevant Local Authority.
For further information, or for advice on putting forward a site, contact Katharine Foot or Chris Graham on 01285 648 107
For Sale by Private Treaty
|
The Norcote Salerooms
Friday February 1st at 9.30 am at the NORCOTE SALEROOMS |
For Sale by Private Treaty MILL FARM, EWEN  A beautifully positioned farm with sporting, equestrian & development potential and a 4 bedroom 17th Century Listed Farmhouse fronting the Thames. Range of modern & traditional buildings with several planning consents for conversion. |
SPRING COLLECTIVE
Friday 18th April
Tel. 01285 648 115 |
TO LET 40 Ha. organic grassland for hay - available near Sherborne, Northleach. Contact: 07974 133 530 or 01451 843 015
For clear, objective and professional advice on these or any other agricultural and rural estate issues please contact one of our Agricultural Team:
Robert Young ~ Mark Hill ~ Christopher Graham ~ Paul Oughton ~ Brian Smith
Peter Kirby ~ Stuart Milsom ~ Margaret Bush ~ Bethany Morris
Tel. 01285 648 113 Fax.
01285 640 494
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upon comment on this newsletter.
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