Jeremy's Blog 15th March 2024: New Issues for Farm Advice
This article by Jeremy Moody first appeared in the CAAV e-Briefing of 14th March 2024
Pressures on clients’ choices as to the use of property continue to develop with new factors to be taken into account for advice.
The Budget’s tax hit on holiday lets may see an appraisal of how cottages are used. Answers may range from keeping them, if integral to the holding in a tourist area and hoping to benefit from others going out, to switching to longer lettings or sale at the reduced rate for residential CGT. While the expected loss of relief on interest may be less material to most farms and estates, the loss of holdover relief on family gifts of holiday cottages may be more of a challenge, especially with the £2 million start to tapering the Residential Nil Rate Band Amount for IHT. The answers will be individual.
In England, each wet day seems to see another 100 SFI applications made. The rural rumour mill talks increasingly of wider use of non-production options, whether legume fallows or, increasingly, of wild bird seed. Nationally, there seems no substantive evidence for this at any scale in 2023 – our Land Occupation Survey found 2023 to have the highest percentage of re-lettings for a decade and unchanged new lettings - but we now look at 2024. In practice, arable farmers beaten by the wettest year for decades are making the best do that they can. A rotational legume fallow NUM3 may fill the place of the oil seed rape with its risks, leaving flexibility for next year. Others may look at the poorest third of the farm. We wait to see if they really mean longer term change.
Such instrumental use of the new schemes to deal with this spring’s problems brings its risks if the aims of scheme actions are not understood. We are now working with schemes with fewer narrow rules than under the CAP but more interest in outcomes. Looking a little ahead, SFI has evolved substantially from Pilot to 2022 to 2023 and prospectively for 2024. It might well do so further. An option now might not be there or could be more demanding in three years time.
A warm and drier summer and good conditions for September seem likely to change the mood and see plans set today evolve. The optimists may always expect more normal weather to resume. Many may feel a pragmatic need to make a larger commitment now, intending to scale back for next season when they can farm fully again. Dairy farmers will want to watch the available land for slurry use – an issue also under the Welsh proposals. IGL2 may squeeze some grazing for sheep. Some may need to find ways out where an action later proves a trap.
SFI can also be used to support experiments, easing risk. With the increased cost of development and regulation both reducing the future range of chemistry available for crops, the IPM options give a subsidised taste of using other tools for crop protection, a learning exercise gaining insights before they may be essential.
These issues may become more complex and individual than was the case under BPS, especially where more farms come to have multiple agreements with their own timing and to be managed in harness. The need for client-based advice remains paramount.