The estate agents and property consultants, Carter Jonas, are warning tenant farmers not to make any decisions regarding their retirement before they fully understand the details and tax implications of the Government’s lump sum exit payment scheme.
James Bradley, a partner at Carter Jonas, said that the scheme should be viewed as a “positive and helpful step,” however he is concerned that details published about the scheme will not ‘go far enough.’
“Careful consideration should be given to the offer being made by Government and how this might benefit an individual retiree’s plans. For example, full residential value is rarely reflected in the rent paid for Agricultural Holdings Act tenancies, and the outgoing farmer will find residential rents to be both higher and reviewed more often,” said Mr Bradley.
He added: “The lump sum exit scheme is not a grant and will therefore be subject to Capital Gains Tax. With no base cost of entitlements, the whole amount will be subject to tax. Individuals should consult with their financial adviser and check personal allowances that may be used to offset gains.”
Nonetheless, Mr Bradley agrees that the principle behind the scheme should be supported, though he deems it unlikely that “the details we have seen this week will be the catalyst for a large number of retirements, which is the significant shift that Ministers are hoping to create.”