Money Man

PRISM will mean direct support for those in our supply base who qualify for the programme, all of the outcomes will be made available to the wider industry.

“In this way, it’s our hope that this initiative will play a part in helping beef and sheep farmers across the country become the global leaders in sustainable meat production – with lower emissions, lower costs and improved productivity.”

Improving animal health and welfare will also be key to the process, as this can be linked to up to a 10% reduction in emissions, according to the Acting on Methane report launched in April 2022 by Ruminant Health & Welfare.

Chair of Ruminant Health & Welfare and former president of NFUS, Nigel Miller, commented on the new programme: “Having a net zero goal means we must all contribute carbon savings and be prepared to change, and this ABP initiative, working with farming partners, has the potential to identify the value of effective health management and be a signpost for the whole industry.

“Management of livestock health is a key component of all viable low carbon production systems,” continued Nigel Miller, who is a beef and sheep farmer based in Galashiels. “Focusing herd or flock health programmes on diseases that impact growth rates and/or food conversion efficiency can directly reduce methane emissions; countering conditions that cause involuntary culling, including reproductive failure and lameness, can eliminate a significant carbon cost from breeding systems.”

The collaboration with Andersons is led by partner and Senior Research Consultant Michael Haverty, who, with his team, will focus on carbon assessments as well as other sustainability benchmarking. Professor Jude Capper leads the input from Harper Adams, and will be indicating what areas each producer could be focusing on over the duration of the project to achieve most gains.

THEMONEYMAN Land tax and legal issues

By Ian Craig

I spoke recently at an event with a firm of land agents and there was a huge amount of interest from the audience in land prices and forecasts. The agents offer various good reasons for the current prices paid. Whilst there has been an uplift in input costs, certain sectors have also seen an equivalent increase in commodity prices. Also, lack of supply, IHT reliefs, good long term investment and the old adage “they are not making any more of it” were some of the other reasons. The lack of supply will be partly due to there being no good reason for some landowners to sell. The Basic Payment regime continues for the time being and renting out land provides an income, so why sell if you don’t have to?

The ownership and letting of land throws up many taxation and legal considerations. For those landowners who choose not to actively farm the land there are several choices. Land can be let out on modern limited duration tenancies. These leases offer flexibility and are now widely used and understood. Farm land and property that qualifies for Agricultural Property Relief (APR) can be relieved from Inheritance Tax at a rate of either 50% or 100%. For any lease granted after September 1995 there will be 100% Agricultural Property Relief available, but not until the land has

Ian Craig, Partner at Azets

been owned and used for agriculture purposes for 7 years.

Where the owner farms the land then 100% APR is available after occupation of 2 years. There are various arrangements to allow landowners to act as the farmer. These include a partnership, share farming and contract farming arrangements. Contract farming is the most common and there are various different styles adopted. These joint agreements generally have the landowner receiving a rent equivalent, referred to as a first charge, and then a small share of the annual profit. The contractor gets a fixed amount for his input to the farm and a share of any profit made.

With a Contracting arrangement the key difference from any lease is that the landowner is participating in the trading activity. What tax advantages does that bring? With Inheritance Tax there can be some, although HMRC may challenge cases involving a Contract Farming agreement, contesting that the farm management is being undertaken by the contractor rather than the landowner. This can be a practical reality, particularly where over the passage of time the landowner becomes elderly or suffers from ill health.

If Inheritance Tax benefits cannot be guaranteed with a Contracting Agreement there can be Capital Gains Tax advantages available. If a landowner sells a farm Capital Gains Tax can be payable at a maximum rate of 20%. There is a reduced rate of Capital Gains Tax for those qualifying for Business Asset Disposal Relief on gains up to a lifetime limit of £1m. To qualify for Business Asset Disposal Relief the landowner must have been trading for 24 months and using the land in the course of the trade. Where all the land is let there will be no opportunity to claim Business Asset Disposal Relief. If a sale is a possibility in the future a Contracting Agreement will probably be more advantageous to a landowner than some form of lease.

Any landowners planning to let land or enter into a Contracting Agreement should consider all the legal and tax issues. Sadly it is often not until after the death of a family member that a lack of planning is exposed, by which time it is too usually too late.

If you would like to discuss any aspect of this contact Partner, Ian Craig on 01738 441 888 or email ian.craig@azets.co.uk. Ian is a Partner at Azets, accounting, tax, audit, advisory and business services group.