Most tax efficient way of farming land as a land owner?

[Pilatus]

For example if one inherits / buys a 1000 acre
farm but does not want to farm it oneself what is the most tax efficient way of farming it, Farm Business Tenancy, Contract Farm it, etc .

 

[Roger Perry]

I was told that the only way to make money of of a beef herd was if they were able to lie in the shade of an oil derrick.

For example if one inherits / buys a 1000 acre
farm but does not want to farm it oneself what is the most tax efficient way of farming it, Farm Business Tenancy, Contract Farm it, etc .

Why limit yourself, know of a few 5-10,000 acre operations for sale.
A spud farm nearby for sale, 11 qtrs plus all equipment/tractors/trucks etc, plus huge storage all in operation.........think they are ASKING $12m

 

[Formatted]

For example if one inherits / buys a 1000 acre
farm but does not want to farm it oneself what is the most tax efficient way of farming it, Farm Business Tenancy, Contract Farm it, etc .

Are we talking about the farm in Hereford that is 970 acres and offered on a 5 year FBT?

 

[Steevo]

Surely this depends on which taxes you are trying to be efficient with.

If letting for less than 10 years you risk losing APR I think. You would have a steady income stream however with no cost to you.

If you have it contract farmed you are IHT ok but you still have to fork out the capital for seed, spray, fert etc. You also could risk making less/a loss.

It all depends on what you want to achieve and what situation you are in financially.

 

[Y Fan Wen]

You also could risk making less/a loss.

Reminds me of a neighbour talking to Dad about the plans for a crop in the field they were viewing, 'Yes, you'll probably make less loss that way.'

 

[fgc325j]

I was told that the only way to make money of of a beef herd was if they were able to lie in the shade of an oil derrick.


Why limit yourself, know of a few 5-10,000 acre operations for sale.
A spud farm nearby for sale, 11 qtrs plus all equipment/tractors/trucks etc, plus huge storage all in operation.........think they are ASKING $12m

Correct me if i'm wrong, but a quarter is 160 acres?, so 11 quarters would be 1,760 acres?.

 

[Kiwi Pete]

Follow the advice given on TFF and paying tax won't be much of a worry.

 

[farmerdan7618]

If you really want to pay no tax, then just own it and let it rewild itself. Hold until death and then leave to a charity. That way there would never be any tax to pay.

I suspect there is actually a goal to achieve with it, and then a want to achieve that goal tax efficiently. It depends on what that goal is, as to what is the best thing to do with it.

If it is to pass on wealth to the next generation, then passing at the time of inheritance would effectively skip a generation for IHT purposes, without triggering a capital gain.

If it is to generate an income to reinvest in the farm, then a limited company may be best, if it is to generate an income to reinvest in another business, then possibly own in a holding company, with the businesses as separate subsidiary companies.

If it's to make money on which to retire, it might be worth putting it into a pension fund or a trust in order to spread the income over the years in which it is drawn.

If it is just to make money for personal expenditure, then possibly letting could be the best way.

There is no one answer, and generally advice on these things are worth it in the long run.

(I should also caveat that this should not be relied on as investment or tax advice due to not knowing the circumstances)

 

[roscoe erf]

just do what the rest of us do and make a loss

 

[roscoe erf]

Follow the advice given on TFF and paying tax won't be much of a worry.

that includes yours then

 

[Kiwi Pete]

that includes yours then

Absolutely. You just about get better value donating money to charity than paying our loony politicians wages

 

[Steevo]

If you really want to pay no tax, then just own it and let it rewild itself. Hold until death and then leave to a charity. That way there would never be any tax to pay.

I suspect there is actually a goal to achieve with it, and then a want to achieve that goal tax efficiently. It depends on what that goal is, as to what is the best thing to do with it.

If it is to pass on wealth to the next generation, then passing at the time of inheritance would effectively skip a generation for IHT purposes, without triggering a capital gain.

If it is to generate an income to reinvest in the farm, then a limited company may be best, if it is to generate an income to reinvest in another business, then possibly own in a holding company, with the businesses as separate subsidiary companies.

If it's to make money on which to retire, it might be worth putting it into a pension fund or a trust in order to spread the income over the years in which it is drawn.

If it is just to make money for personal expenditure, then possibly letting could be the best way.

There is no one answer, and generally advice on these things are worth it in the long run.

(I should also caveat that this should not be relied on as investment or tax advice due to not knowing the circumstances)

I really like this post!! Well thought through and very helpful.

 

[Pilatus]

I started the thread as some one said to me yesterday, is it true that ...........estate is going to rent it’s arable land out, I said I don’t know.
The arable land is farmed at the present time on a stubble to stubble contract fee. I pondered to my self later on ,as I thought very unlikely to rent the land out as not tax efficient for land owner, a share farming agreement maybe.
All in all non of my business but we all tend to like a bit of gossip to take our minds of our own business

 

[teslacoils]

Contract farm it for two years, or fallow it (in your own name as the farmer. Then let it out on fbt that can taken back easily on your death.

 

[Steevo]

I started the thread as some one said to me yesterday, is it true that ...........estate is going to rent it’s arable land out, I said I don’t know.
The arable land is farmed at the present time on a stubble to stubble contract fee. I pondered to my self later on ,as I thought very unlikely to rent the land out as not tax efficient for land owner, a share farming agreement maybe.
All in all non of my business but we all tend to like a bit of gossip to take our minds of our own business

S2S needs some management input, perhaps the landowner wants to get out of that/doesn’t have the skills.

Maybe offered a better guaranteed income by letting?

Land being owned by several siblings or such rather than one landowner then letting could seem fairer and more impartial and thus save arguments. Less pressure on the one with farming knowledge to perform/manage yet not be paid for it?

 

[Kiwi Pete]

I started the thread as some one said to me yesterday, is it true that ...........estate is going to rent it’s arable land out, I said I don’t know.
The arable land is farmed at the present time on a stubble to stubble contract fee. I pondered to my self later on ,as I thought very unlikely to rent the land out as not tax efficient for land owner, a share farming agreement maybe.
All in all non of my business but we all tend to like a bit of gossip to take our minds of our own business

Completely different context, but, sometimes landowners just like a bit of a change.
Know plenty of dairy owners who "hopped" back and forward between contract milkers/ sharefarmers and employing staff/managers and buying a herd, in one case I can think of he's bought 3 different herds in 10 years, and had sharefarmer's herds in between those.

None so silly as folk, I just think he lacks clarity or direction and gets pee'd off with employing staff,,,, then gets pee'd off with someone else being in charge "on his farm" - rather than purely financial motivation.

Maybe the "don't wants" override the do wants in this case?

 

[Derrick Hughes]

A farm is like owning a house or a car .if you dont look after it its value will fall ,

 

[cattleman123]

My view is this...no profit...no tax....no point..think about it guys

 

[Goweresque]

You can work out what is most effective under the current rules, but within 5 years at most there will be an election, and who knows who will be in charge after that and what their tax rules will be, or indeed laws on tenancies etc? Owning land is a long term business, and politics has the attention span of a gnat, so the two don't make a good fit. Remember that landowners who signed tenancies in 1975 weren't expecting that they'd never see their land again for 3 generations.........

 

[Roger Perry]

Correct me if i'm wrong, but a quarter is 160 acres?, so 11 quarters would be 1,760 acres?.

Correct, 160 acres............its' very productive, fully operational but overpriced at the asking, includes all the tractors and equipment, irrigation etc.