November Professional Ponderings
I hope everyone coped with the clocks going back last weekend. My daughter clearly did not get the Memo; she was up at 5.00 am on Sunday, the morning after a friend’s wedding! There is much to talk about this month, so without further ado.
Over the past few weeks, I have been helping clients with the negotiation and completion of farm business tenancies commencing at Michaelmas. Many believe that completing the tenancy is the final hurdle, which can be the case, but for larger longer tenancies, there may be some housekeeping to do, specifically a Stamp Duty Land Tax (SDLT) return, and a requirement to register the lease with HMLR.
In respect of the former, you must pay SDLT if you buy/acquire an interest in land over a certain price; a tenancy is considered a leasehold interest. The current SDLT threshold is £150,000 for non-residential land and properties. There is a handy calculator available on HMRC’s website to work out how much tax you will pay; in simple terms, the value of the lease is calculated by multiplying the rent per annum by the length of the lease. If there is tax due, then you must send an SDLT Return to HMRC and pay within 30 days of completion.
I gather this can be undertaken online, but I am still using the last of the paper forms we have available, which do take some figuring out. If there is a SDLT liability, then I suggest you don’t leave it until the last minute to complete the form(s). A late return will result in a late return penalty.
In respect of lease registration, the Land Registration Act 2002 deals with the requirement to register leases. Leases granted for a term of more than 7 years will usually be compulsorily registerable; there are some exceptions where the land has unregistered title. Once registered, the lease will be recorded against the registered title. Again, the application forms are not straightforward, so make sure you allow yourself plenty of time to complete the forms. It is worth noting that many modern tenancies will likely contain a clause obliging the Tenant to pay Stamp Duty Land Tax and Register the Lease, and therefore, the Tenant would be in breach of his tenancy if he did not do so.
We are privileged to be trusted by a great number of farming clients, many of whom are willing to discuss the every detail of their business with us. Occasionally, we receive calls from clients seeking advice concerning a ‘Gentleman’s Agreement’. I always start and end a conversation of this nature with “you should make sure that the terms are written down to avoid any headaches in the future.” However, often arrangements still proceed on an informal basis, which can come back to haunt them. In the majority of cases, the agreement continues without issues. However, disputes usually arise when there is money at stake. I have over the past 10 months or so seen several instances where a problem could have been avoided altogether, if the parties had recorded the terms from the outset. In all of the instances, it will end up costing the client more than it would have done if they had put in place a simple agreement recording the terms at the outset. Therefore, I urge all of you to ask yourself “do I have any informal arrangements that have the potential to ‘go wrong’?” if you do, then act now before it is too late.
In late October, the Environment Secretary, Michael Gove confirmed that there will be a further £40 million made available for Countryside Productivity Large grants. Applications will be open to farmers wanting to improve productivity by investing in new technology; and farmers/food processors looking to invest to improve the processing of milk, meat and fruit.
In brief, the Countryside Productivity Scheme provides funding for projects in England, which improve productivity in the farming and forestry sectors and help create jobs and growth in the rural economy. It is administered by the RPA and funded under the Rural Development Programme for England. More details to follow in due course.
It wouldn’t be a Professional Ponderings if I didn’t mention BPS, albeit in more general terms. We understand that further changes could affect the BPS 2018 Scheme Year. In an attempt to simplify the Common Agricultural Policy, changes were agreed by EU Member States on the 16th October 2017, and those changes to the BPS can be summarised as follows:
- Making the active farmer assessment optional for Member States.
- An increase to the Young Farmer top-up payment from 25% to 50%.
- Potential changes to Crop Diversification thresholds; and
- Adding plant varieties that can be used as EFA, for example, Miscanthus.
The European Commission has stated that these changes should take effect from the 1st January 2018, but some of Member States are saying that the timescale is not feasible for implementation and have requested delaying until January 2019. Watch this space.
Finally, a recap on the grants available from the LEADER scheme, which is part of the Rural Development Programme for England (RDPE) and is funded through the European Agricultural Fund for Rural Development. The LEADER programme has been running across England for more than 10 years, and the latest round of funding runs from 2015-2019. In the current round of funding, LEADER programmes are running in North and West Northamptonshire meaning that there is potential funding available for many Bletsoes clients. If your business is located within the North and West Northamptonshire area (which can be determined using the map on the Local Action Group Website), then you may be eligible for funding. The amount of funding available is dependent on the scale of a project and the type of project proposed. Furthermore, the cost of a project is considered as not all costs may be eligible.
The minimum grant that can be applied for is £5,000, and the maximum grant amount will be up to £100,000. If a grant is awarded, it will typically be limited to a maximum of 40% of the projects total eligible costs. However, some types of project can obtain higher rates depending on certain priorities. The Local Action Groups accept expressions of interests at any time, however full applications need to be submitted before the 6 weekly Decision Panel meetings which are held on a rolling basis. The final deadline for an application is intended to be December 2018. If you are interested in making an application or would like to talk about the potential of a project, please do not hesitate to contact the Agricultural Team.
Anyway, that will do for this month’s Ponderings. I hope to see plenty of you during November.
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