Do you have a plan in place for handing over the farm?

The number of farms here with succession plans in place has increased from 33 per cent in 2020 to 51 per cent this year, according to new research carried out by NFU Mutual.

It comes at a time when UK farming is undergoing huge financial transition, and Northern Ireland’s Department of Agriculture, Environment and Rural Affairs (DAERA) has recently launched the Future Agricultural Policy Framework.

However, that does mean 48.9 per cent of farmers in Northern Ireland have still not formally planned for the future.

Despite the major changes facing the industry, 29.6 per cent feel it is not relevant to them, although that has dropped from 42.6% per cent, suggesting more are realising the importance of planning for a handover.

In fact, almost a fifth of farmers in Northern Ireland agree that a succession plan is important for their farm, but haven’t got around to setting one up just yet.

Chairman of NFU Mutual, Jim McLaren, explained: “As a farmer myself, I know first-hand that farming isn’t just a job, but a way of life.

“Farms often involve the whole family and span generations.

“So, when you think about the future of your farm, it’s not just a question of land and assets; the attachment that you and your family have to your farming lifestyle often runs much deeper than that.

“These considerations can make it complicated to plan for the future of the farm, especially when it comes to handing over the reins to the next generation.

“There is currently plenty for farmers to contend with - from Brexit to Covid, to subsidies and rising costs.

“Confronting these challenges often leaves little time for planning for the future.

“However, it is also true that events such as the Covid pandemic can shine a much-needed spotlight on the need to plan for the future.

“Now, more than ever, it’s essential to ensure your farm and your finances are in order.”

Financial planning, when handing over a farm, has always been essential for farmers keen to avoid unwanted tax bills, but there are a number of changes that have heightened this need.

Farmers will be keeping a close eye on the upcoming budget for any changes to taxation that could affect them.

Sean McCann, chartered financial planner at NFU Mutual, said handing over the farm to the next generation doesn’t mean giving it all away on day one.

“It’s the aim of many farmers to hand the business on to the next generation,” he said.

“Some are happy to do this during their lifetime, while others want to hold onto everything until the day they die.

“There is no ‘right time’, but having a plan not only allows for a smoother transition, it can also play a big part in securing the future of the family farm.

“It’s encouraging to see more farmers putting plans in place, with the industry going through a big transition with changes to subsidies and the exit scheme proposals.
“Handing on the farm doesn’t have to mean giving away the ownership of all the assets on day one.

“The older generation could look to hand over more of the day-to-day management of the business while retaining the ownership of the assets to a later date.”

Regardless of how you plan to hand the farm on, Sean advises the aim should be to do it “without paying more tax than you need to”.

“There are a number of tax breaks available, and it’s important to take advice to maximise the benefits and avoid the pitfalls,” he added.

“It’s important to involve the whole family when planning succession, to understand what role each member of the family will play in the future, and how assets will be owned in the short, medium and long term.

“Unexpected events can happen to any family, so having the right wills and agreements in place can help make sure the ownership of the business ends up in the right hands at the right time.”

He ended: “It’s also important that the right income protection and life insurance is in place, so that if an unexpected illness or tragedy did strike, the family and the business are protected.”