The government’s consultation about a potential Lump Sum Exit Scheme for those in the agriculture sector finished recently. I hope that good use of this opportunity was made by the trade bodies, not to mention those of you interested as individuals.
What is the Lump Sum Exit Scheme?
The lump sum would be paid to farmers who stop farming (having sold or gifted their land or let it or relinquished their agricultural tenancy) in place of the annual subsidies payments they would have received over the next 5 years if they had continued farming. Details of the scheme will not be confirmed until October 2021 and then there will be only a short period of time to apply for it.
Do farmers ever retire though?
The issues around succession for farmers are invariably complex where emotional baggage often outweighs objectivity and financial common sense.
To begin with, the conventional advice often given to farmers is simply not to retire. Of course, actual involvement and commitment to the business can be scaled down but that process must happen without impinging upon the availability of those valuable Inheritance Tax reliefs for Agricultural and Business Property if the benefits are to be retained. In some cases, that may not be a significant factor and so not a major issue. However, make sure that the situation is checked through.
Personal and family considerations will occasionally prove to be huge stumbling blocks. The importance of lifestyle will also usually come into the conversation. It’s easy to see why. If the farmer in question has spent the whole of his or her life living and working in the same place (and often previous generations as well), packing up and moving out of the environment will be extremely daunting and the offer of a cash incentive from the government will not hit the spot.
Add into all that the inevitable generational problems. If you are in one of the family businesses where all the real work is done by sons and daughters but control of the cheque book is still held by Dad, you will recognise how difficult the prospect of retirement might be. None of these thorny questions even scratches the surface of those intractable issues around potential family breakdown and prospects (however illusory) of divorce.
However, I am painting a deliberately gloomy (but informed!) scenario and there will be many simpler equations to work through. It is easy to see why a tenant farmer operating within a Farm Business Tenancy which is coming to an end, might find a government incentive to retire or quit the industry a helpful persuader.
Whatever the situation, such decisions will need to be informed by good and expert advice. They are easy to get wrong; so much better to reach the right one! Even in the middle of harvest!
Agricultural law specialists with strength and depth, call or contact us for a confidential discussion about any issues that are concerning you.