The range of options available, and the importance of acting early with professional input
It can be difficult to recognise when land has acquired, or may acquire, 'hope' value due to its potential for future development, e.g. for alternative uses, such as pony paddocks, or more significantly for housebuilding or diversification projects.
However, the forward planning needed to ensure the smooth succession of such land to the next generation, while mitigating the taxation implications, is generally made easier by discussing it with professional advisers at the earliest possible opportunity. It is generally wise to seek professional input before entering into legal commitments to third parties, e.g. developers.
A range of options may ultimately be recommended, which may include an outright gift to the next generation, the creation of a trust or private company, the use of a new or existing farming partnership, wider planning if the land forms part of a wider landholding or estate, or even simply retaining the land in its current ownership.
The advantages and disadvantages of each option should always be thought through carefully, in light of taxation rules, family structures, the wider subject of succession to any farming business, valuation issues, and practical matters such as any existing tenancies, access and crop rotation.
Some options can allow the original owner to retain a degree of control over the land. Some options can be usefully employed in order to provide enhanced comfort to family members who may not be inheriting agricultural assets.
It may be advisable to consider structuring a succession plan with a view to obtaining entrepreneurs' relief from capital gains tax, which can significantly reduce the rate of capital gains tax that is payable on a disposal of the land.
The current taxation environment offers a number of succession planning opportunities, and many people are viewing this as an appropriate time to review this subject.
Wrigleys Solicitors can advise you on succession planning for diversification projects and land with 'hope' value, and associated property work (e.g. agreements with third parties).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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