21 Nov Make the right choice when it comes to selling your farm
When it comes to considering whether it’s the right time to sell, move on from, or pass on your farm, there’s a lot to consider.
Apart from the financial and logistical factors, there’s also the powerful emotional connection that farmers have with their land and livelihood. Your farm and the genetic legacy of your herds and flocks may well have been in the family for generations.
Retiring or leaving the farming industry is a big decision. But one of the biggest questions you need to ask yourself is what do you really want, both in terms of your farm and in your own life in the coming years.
You may reach a point when it feels like the right time to move on to a new challenge or to reap the rewards of a hard-working life and relax.
What to consider when selling a farm
When you’re thinking in practical terms about selling your farm, here are some useful questions to ask yourself:
- Do you want to sell your farm as a whole, or split it into lots and sell them separately?
- Would you like to retain ownership of some of the land or any buildings? Perhaps keeping the family home as you consider selling the bulk of your desirable farmland?
- Are you selling in order to purchase another farm or continue earning money for the farming industry elsewhere?
- Or are you selling in order to retire (and perhaps invest your newly acquired assets)?
Selling a home is complicated enough, but as professionals within the farming and agricultural fields, selling a farm is a whole other ballgame.
Speaking with an independent financial advisor can help you make these tough financial calls, ensuring you’ve considered your situation from all angles and you’re not missing out on maximising your income.
Selling a farm – what you need to know
There’s no need to rush the decision to sell or pass on a farm, but it’s worth knowing what the process can be like in advance.
Selling a farm typically takes between six and 12 months, with most properties coming on to the market from May to mid-June. Selling a farm outside of those months isn’t unheard of, but it may affect your sales appeal to do so.
Your timing in when you sell is also dependent on when you’ll need to sell or send out your livestock. It may be worth timing your sale around this, just as arable farmers may wish to wrap up their harvest before selling.
Selling a farm is rarely a fast process and requires careful financial planning. This is something the team here at HWIFM can certainly support you with as you figure out which approach suits you best.
Avoid tax pitfalls when selling your farm
When you’re selling your farm to retire or downsize, the way you go about it can seriously affect how much money you receive from the sale.
As in the sale of any home or land, the profit from the sale of your farm will likely be liable for capital gains tax. This is especially the case if you’re choosing to retain some of the farm’s land or buildings. The sale’s* income may also be liable for inheritance tax.
If you’re planning on investing the money from the sale of your farm, putting it aside for inheritance, or gifting it to your family you may well wish to consult an independent financial advisor. If planned in advance, there may be ways to minimise your tax payments.
Receive exits payment for selling your farm in 2022
Last year, Defra announced a consultation on a new opportunity for farmers to collect a lump sum exit payment in 2022 when they choose to sell or pass on their farm.
While there’s a payment cap of £100,000, depending on how much farmers have received through the Basic Payment Scheme (BPS) annually since 2018, you may be able to apply for and receive a significant sum.
This opportunity is ideal for seasoned farmers who are ready to step away from farming (as you need to be exiting the industry, amongst other caveats, to be eligible). Depending on the outcome of Defra’s consultation, it’s also a once-in-a-lifetime incentive, as applications are only open in 2022.
Check out next month’s blog post for more info, or get in touch with the team at HWIFM to explore whether you’re eligible for and interested in this unique financial incentive.
Is selling your farm the right decision for you?
It’s time for our favourite answer to our favourite type of question; whether this decision is the right one or not depends entirely on you.
Perhaps you’re chomping at the bit to retire and/or say goodbye to farming life? Alternatively, you might be in the early stages of considering a sale in the near future.
The team at HWIFM offer advice and guidance based on what you want today, tomorrow, and five years down the line.
Making tough financial decisions and planning for potentially challenging chapters of your life can be gruelling. Don’t to do it alone – get in touch with us to explore what selling your farm might look like for you.
UK Parliament – MPs urge Government to assess risks of phasing out farm payments
Farmers Weekly – So you want to… sell your farm?