Chris Lloyd

Name another industry where the grower or manufacturer is paid less than the cost of production—and has no say in the price. In farming, that’s business as usual. Where did it all go so wrong? 🤷‍♂️

I've been meaning to do a piece on Farming Companies hit by the #FamilyFarmTax. Similar principles apply to other trading companies. Stick with me, this is painful. Alan and Bob, brothers, inherited their farms in the late 1970's when land was £1,000 an acre. 400 acres, a house and some kit means it's now worth £5m. Alan is a sole trader with one daughter, Cath. Bob farms via a Ltd company and has one son, Dan. Both brothers lost their wives a few years back. Alan and Bob die unexpectedly shortly after next April, and there's an IHT bill on both their estates of £735k each. The next gen can't afford to pay that from the income they generate of £50k p.a., so they both look to sell land to pay for it. You'd hope their circumstances were similar. Cath sells 75 acres at £10k an acre. No CGT as she has just inherited it, and she pays off the inheritance tax. She's now farming 325 acres and things are much tighter. Dan needs to get money out of the company. The company sells land, but has to pay corporation tax because there was no uplift in the company's land prices on death. He also needs to get that money out of the company, and that payment will be taxed as a dividend. To pay the IHT bill of £735k, Dan has had to sell ~156 acres~, more than twice that of his cousin. He realises £1.56m, pays corporation and income tax of about £820k and only then gets the money in his own hands. He can then use what's left to pay the Revenue the inheritance tax. Cath has sold 19% of her land, but Dan has had to sell 40% of his. All circumstances are different. Get advice on your own position from someone you trust.

🙏👍 @bencm305 - pictured here is me(left) my brother and business partner (middle) and my father W/O HiViz (retired from the business but still a sounding board) Get your affairs in order fellow farmers. Now more than ever, succession planning AND IMPLEMENTATION is key 1/