Farming and the Law: David Wybar reflects on a year of mixed fortunes for agriculture

BIRKETT Long’s Rural Business Team looks after farming families and businesses throughout East Anglia and during the course of a year we encounter a variety of issues.

: : Harvest/grain prices: The 2012 harvest was challenging for our farming clients who faced drought conditions followed by a very wet spell that started within minutes of the hose pipe ban! Yields are down across the UK (15% or more in some areas) although East Anglia has fared better than most.

A heat wave in Russia and drought in the US have led to global shortages and increased wheat prices.

We are confident that our clients, with good land and a more stable climate than most for growing arable crops, are well placed to prosper in the coming years, particularly with a dynamic younger generation seeking opportunities to develop their businesses.

: : Land prices: Land prices continued to rise during 2012 although not at the same rate as in 2010/11. Ignoring small areas of land with development and/or amenity value, blocks of bare agricultural land are achieving prices between �6,500 and �10,000 per acre. While others look to invest in agriculture, farmers are competing for land, not least because the increase in the value of their own land has given them the ability to borrow to fund strategic purchases.

: : Inheritance Tax - Agricultural Property Relief (APR): The position of the farmhouse continues to attract considerable attention with the Inland Revenue putting the taxpayer through two important tests, first to establish whether it qualifies as agricultural property at all and, if it does, to establish its agricultural value as APR is available only on the agricultural value of agricultural property.

: : Inheritance Tax - Business Property Relief (BPR): Historically, farm cottages no longer required in the business or by the family and let on Assured Shorthold Tenancies have been regarded as investment property and have attracted Inheritance Tax at 40%. Following a Scottish case (Balfour) a few years ago, farming businesses are encouraged to put such cottages on to the balance sheet in an attempt to include them as part of the overall business, thereby attracting BPR.

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: : Common Agricultural Policy (CAP): As we enter 2013, the delay in the current reform of CAP continues to make it difficult for farming businesses to plan ahead with certainty.

For advice on any aspect of rural business law contact David Wybar at Birkett Long LLP on 01206 217312 or .

: : David Wybar is a partner and head of the rural team at Essex law firm Birkett Long.