Things to watch for with new exit scheme
DEFRA and the Rural Payments Agency have now published more information on the lump sum exit scheme which has raised a few concerns in relation to tax.
The application window opens in April and closes on September 30. The scheme will be open to BPS applicants in England who have a clear plan on how they will exit the industry. The applicant can keep the farmhouse together with any commercial property and up to five hectares of agricultural land.
However, this could cause some issues with Agricultural Property Relief under inheritance tax, especially if the farm is rented out and the farmer resides in the farmhouse.
Additionally, the lump sum will be treated as capital and therefore subject to Capital Gains Tax. Where applicable the reliefs will still apply but it is something to consider for those wanting to retire.
While it is appealing on the surface, it is clear that the lump sum exit scheme will not provide a standalone retirement fund for farmers.
Harriet Jones, Rural Surveyor at Barbers Rural
