Solar and Estate Planning

[steveR]

As some will know, we already have 5meg of solar here which is bringing a handy, index linked income stream. The Pension pot...

I have been approached by (yet another) Company looking to rent land for more PV with a provisional 50+meg availability. They are wanting 150ac, which I cannot provide, but I can see this may have legs with a neighbouring farmer or two in the mix, albeit not that large an area.

With future farming incomes looking... variable, I will be looking long and hard at this. Very early days still...

However, while getting some lawns cut this afternoon, I started to think more on Succession and Estate planning and how the Revenue look on land rented out for PV. Our existing Lease expire in 2035/36, so I might even make that date.

Has anyone here gone through the process yet following a Death, and seen what view the Revenue are taking on Land leased for PV? Presumably no APR, but what if it almost due to be returned to agriculture...? Ours is being grazed and is even partially down on the RPA mapping as grassland! I graze and and I am now managing the land also in and around the site.

 

[Exfarmer]

As I understand it, if you let land for solar it does not qualify for any IHT relief. it is regarded purely as an investment in the land.
However if you survive the initial period and the panels and equipment return to you, as any good contract would ensure, then you can set up your own solar company which would be entitled to relief provided you actually do the work. Management monitoring etc. However the rules may change a lot in the next few years.
May be possible to put it in trust but beware of capital gains ! Take good advice .

 

[steveR]

As I understand it, if you let land for solar it does not qualify for any IHT relief. it is regarded purely as an investment in the land.
However if you survive the initial period and the panels and equipment return to you, as any good contract would ensure, then you can set up your own solar company which would be entitled to relief provided you actually do the work. Management monitoring etc. However the rules may change a lot in the next few years.
May be possible to put it in trust but beware of capital gains ! Take good advice .

The "good advice" is hard to find where there is experience of such arrangements. As you say, I also thought that land will not qualify for IHT, but it is what area...? Should there be BPR at some level...?

I am hoping that we can survive long enough for the outcome you describe.... The O&M can all be carried out as is the case now, by independent Contractors, so not an issue.

I am due to have a chat with my accountant next week and will explore the situation. I just felt it would be useful to hear from anyone with personal experience...

 

[Exfarmer]

The "good advice" is hard to find where there is experience of such arrangements. As you say, I also thought that land will not qualify for IHT, but it is what area...? Should there be BPR at some level...?

I am hoping that we can survive long enough for the outcome you describe.... The O&M can all be carried out as is the case now, by independent Contractors, so not an issue.

I am due to have a chat with my accountant next week and will explore the situation. I just felt it would be useful to hear from anyone with personal experience...

I think that lot of the issue may depend on how big the area is in relation to the whole farm. If it was less than 10% the Tax man may ignore it , but if it was 30% + I am certain that it would be excluded from the farm itself and would be taxed.
I though am not in your position and have looked at it purely from a solar business being a qualifying company.
Strangely until this last year my accountant was concerned as it appeared that the company was just idling along collecting fits and exports but luckily we have had issues with inverters etc and the accountant is far happier. I am not so sure

 

[steveR]

I think that lot of the issue may depend on how big the area is in relation to the whole farm. If it was less than 10% the Tax man may ignore it , but if it was 30% + I am certain that it would be excluded from the farm itself and would be taxed.
I though am not in your position and have looked at it purely from a solar business being a qualifying company.
Strangely until this last year my accountant was concerned as it appeared that the company was just idling along collecting fits and exports but luckily we have had issues with inverters etc and the accountant is far happier. I am not so sure

As you say, different business models. I will ask my man on the land area point that you highlight.

My accountant too likes some evidence of "trading" to be seen in the books.

 

[snipe]

From what I have been told either pass it on to the next generation or put the land in a LTD company. But these all need doing before planning is granted.

 

[Exfarmer]

From what I have been told either pass it on to the next generation or put the land in a LTD company. But these all need doing before planning is granted.

Putting land in a limited company has all manner of risks, principally because it can be seen as an investment vehicle, which has no IHT relief

 

[steveR]

From what I have been told either pass it on to the next generation or put the land in a LTD company. But these all need doing before planning is granted.

The use of a Ltd Company seems to be a mixed blessing. On that basis, I kept the land ownership and the actual Solar Company I set up, separate.

 

[HolzKopf]

This is an obvious minefield trying to plan ahead as you wish. We're not big enough to attract the major players but it strikes me that the way Government operates, and particularly this Government, that the winds of change can blow mighty quickly. Already despite the 'dire warnings' we are seeing some pushback from the populace in terms of cost and reliability of new tech plus the realisation that 'renewables' cannot provide a total answer.

The answers you seek are surely too far in the future for any adviser, land, tax or otherwise to give sound advice. All I can say is that if it was me, I wouldn't be banking on anything that far ahead if it risks upsetting the applecart IHT wise

HK

 

[Exfarmer]

This is an obvious minefield trying to plan ahead as you wish. We're not big enough to attract the major players but it strikes me that the way Government operates, and particularly this Government, that the winds of change can blow mighty quickly. Already despite the 'dire warnings' we are seeing some pushback from the populace in terms of cost and reliability of new tech plus the realisation that 'renewables' cannot provide a total answer.

The answers you seek are surely too far in the future for any adviser, land, tax or otherwise to give sound advice. All I can say is that if it was me, I wouldn't be banking on anything that far ahead if it risks upsetting the applecart IHT wise

HK

The problem is who knows what may happen in the next 25 years. There will not be a Conservative government for ever and all farmers are seen as rich and increasingly by all sides as major polluters, ripe for taxation!

 

[steveR]

The problem is who knows what may happen in the next 25 years. There will not be a Conservative government for ever and all farmers are seen as rich and increasingly by all sides as major polluters, ripe for taxation!

Impossible to judge TBH, I fully agree.

The inevitabilities will be Death.... and IHT. However, to touch on the "polluters" angle and the future of farming over the next 10 years, it seems to me that alternative income streams will be increasingly valuable, and may preven farms disappearing under bloody trees.,

 

[Doing it for the kids]

From what I have been told either pass it on to the next generation or put the land in a LTD company. But these all need doing before planning is granted.

And what about CGT, farm land bought for say £800 / ac gets sold at a respectable £12k later one, to your self. That’s a big upfront tax bill...

Putting land in a limited company has all manner of risks, principally because it can be seen as an investment vehicle, which has no IHT relief

Or Ag relief

Impossible to judge TBH, I fully agree.

The inevitabilities will be Death.... and IHT. However, to touch on the "polluters" angle and the future of farming over the next 10 years, it seems to me that alternative income streams will be increasingly valuable, and may preven farms disappearing under bloody trees.,

keep the ownership as it is but lease it to another ltd company for the duration of the renewable lease. That way ownership can remain the same And you have the rent in a ltd company which is arguable Better than in your private pocket, for tax.

 

[curlietailz]

who knows what the tax IHT issues will be in 30 years time

 

[steveR]

And what about CGT, farm land bought for say £800 / ac gets sold at a respectable £12k later one, to your self. That’s a big upfront tax bill...

Or Ag relief


keep the ownership as it is but lease it to another ltd company for the duration of the renewable lease. That way ownership can remain the same And you have the rent in a ltd company which is arguable Better than in your private pocket, for tax.