Budget anxiety for rural family businesses

Summer seems a long time ago now as we slide slowly into autumn. Autumn brings with it a change in season, cooler mornings and shorter days. On the 30 October it also brings the Autumn Statement when the chancellor sets out plans for the country’s finances. It’s an annual event but this year it has hit the headlines because the new government have been fairly clear that there will be changes to taxes and have hinted heavily at changes to capital taxes such as inheritance tax and capital gains tax.

To those of us who have dealt with capital taxes over the years, this is nothing new.  There have been numerous consultations over the years about ways to reform both capital gains tax and inheritance tax, usually meaning ways to raise more revenue. 

For farmers, it is especially relevant as there are reliefs for agricultural property (farmland and buildings) and business property (the trading element of a farm) that are valuable and allow farms to remain intact and be passed on from one generation to another. 

We do not know at this stage what will change and how it will impact on businesses or individuals, if at all.  This uncertainty is unsettling and can lead to a need for action, the feeling that something should be done.

However, when thinking about succession planning, it is important to do so in a calm and measured way.  Tax is only one part of the overall picture.  Looking at how a business should be owned and run over a generation brings together tax planning with the needs of the family and the commercial requirements for the business. There is little point in rushing to transfer assets if this will then disrupt the ability to run the business effectively or will lead to family disagreements. 

So whilst it is important to keep up with the news and hints about the autumn statement that appear in the paper over the next few weeks, it is equally important to take proper advice and to think carefully about how best to pass assets on and to structure businesses so the family can continue to enjoy the benefits for the years to come.