Clueless! Farm inheritance/leasing

FarmerSmith

Hi all,

Was really hoping I could get some advise as I'm a bit clueless at the moment.

Story is my Uncle died in August and left me his farm. Now I'm a farmer for tax purposes only so I'm not going to be using the farm myself. A good family friend who is a farmer is going to take it (mostly for silage he says but there are fields not suitable for silage so he'll prob graze those).

My Uncle qualified for Single Farm Payment (and I also inherited his entitlements) so I THINK the way to do it is have friend lease the SFT from me and get the money back from him??

Figures: Farm is 70 acres (75 but I'm keeping one field myself and one is just boggy/marsh). There are sheds and slatted units.
SFP is worth €15,000pa approx.

So do I let him have it for the €15,000??? I don't want to rip the friend off but I don't want him to rip me off either! We haven't talked figures yet, as legally I don't inherit for another few months.

A local estate agent showed up at my door out of the blue on Monday saying there was a lot of interest in the farm and what was I doing with it so I'm just wondering what kind of figures I SHOULD be thinking about as at the moment I haven't got a clue.

bob charles

FarmerSmith wrote: »

Hi all,

Was really hoping I could get some advise as I'm a bit clueless at the moment.

Story is my Uncle died in August and left me his farm. Now I'm a farmer for tax purposes only so I'm not going to be using the farm myself. A good family friend who is a farmer is going to take it (mostly for silage he says but there are fields not suitable for silage so he'll prob graze those).

My Uncle qualified for Single Farm Payment (and I also inherited his entitlements) so I THINK the way to do it is have friend lease the SFT from me and get the money back from him??

Figures: Farm is 70 acres (75 but I'm keeping one field myself and one is just boggy/marsh). There are sheds and slatted units.
SFP is worth €15,000pa approx.

So do I let him have it for the €15,000??? I don't want to rip the friend off but I don't want him to rip me off either! We haven't talked figures yet, as legally I don't inherit for another few months.

A local estate agent showed up at my door out of the blue on Monday saying there was a lot of interest in the farm and what was I doing with it so I'm just wondering what kind of figures I SHOULD be thinking about as at the moment I haven't got a clue.

Auctioneer is looking for his slice of the cake so. Firstly with the SFP you can lease it to the farmer usually around 75% of the total value. This SFP figure will change over the next few years. Then lease the land at whatever the going rates is in the locality. that could be anything from €50 an acre to €200 an acre depending on the land, the current state of repair, long term lease etc. If I was in your shoes I would try and deal with your mate if your confident he is a good a good client. He maybe willing to improve the land which would be of benefit to both parties. Your asset will increase in value and he would get more output out of the land. Be careful as good tenants are hard to find. If you charge a huge rent figure for the land then you cant expect a farmer to invest his time and money into the land. Take care and if you decide to use a auctioneer it doesnt guarantee you payment for land which in my eyes is crazy

bbam

70 acre inheritance.
€15k SFP.

Sigh......

FarmerSmith

Thanks Bob, that's exactly what I was looking for. I don't intend to go through an auctioneer ( especially not this one) and I do trust the friend so want to be fair. He has his own farm which is very well kept and he's helped my Uncle a lot over the years.

Bbiam - not sure what the point of that post was?

Username John

FarmerSmith wrote: »

Thanks Bob, that's exactly what I was looking for. I don't intend to go through an auctioneer ( especially not this one) and I do trust the friend so want to be fair. He has his own farm which is very well kept and he's helped my Uncle a lot over the years.

Bbiam - not sure what the point of that post was?

I would advise getting a proper lease done up, especially as he is a friend of yours.
It'll cost a few hundred quid, but best to do it properly...

FarmerSmith

Thanks John. Everything will be above board. Especially as I'm hoping he'll take it as a long lease.

Username John

FarmerSmith wrote: »

Thanks John. Everything will be above board. Especially as I'm hoping he'll take it as a long lease.

Ok.

Not sure if it is applicable, but if you are over 40, I think there are certain tax breaks available if you let the land on a long term basis. Might not apply to you, just said I'd say it.

FarmerSmith

Thanks again John. Saw that alright about the over 40 thing but I'm only (:)) 34 so that doesn't apply.

FarmerSmith

Actually as I'm thinking about it - does anyone know how the land/SFP lease is taxed? I have no other income. Currently unemployed and will come off JA when I get the farm income.

freedominacup

FarmerSmith wrote: »

Actually as I'm thinking about it - does anyone know how the land/SFP lease is taxed? I have no other income. Currently unemployed and will come off JA when I get the farm income.

AFAIK it's regarded as unearned income and is taxed at the top rate. There are some costs you are allowed to charge against it but not many.

tommylimerick

you could also lease it to your friend unoffically
by that i mean you and your friend agree a price on the rent of the land
he puts animals into your herd number and you draw your own sfp
this might be very relevant with the new sfp coming
plant the bog with trees which will be tax free income
get your friend to pay the lease money as if he bought silage or hay off you
makes no difference to him , then when you are over 40 it would be easier to have a tax efficent rental income (if it is still there)

solerina

FarmerSmith wrote: »

Thanks Bob, that's exactly what I was looking for. I don't intend to go through an auctioneer ( especially not this one) and I do trust the friend so want to be fair. He has his own farm which is very well kept and he's helped my Uncle a lot over the years.

Bbiam - not sure what the point of that post was?

I reckon he is envious of your inheritance....and I agree with him !!!

DMAXMAN

freedominacup wrote: »

AFAIK it's regarded as unearned income and is taxed at the top rate. There are some costs you are allowed to charge against it but not many.

the concept of un-earned income went out years ago. you are allowed 32k at low rate and the rest at higher rate iirc.as regards costs there wont be many as you are not carrying on the trade of farming

bob charles

tommylimerick wrote: »

you could also lease it to your friend unoffically
by that i mean you and your friend agree a price on the rent of the land
he puts animals into your herd number and you draw your own sfp
this might be very relevant with the new sfp coming
plant the bog with trees which will be tax free income
get your friend to pay the lease money as if he bought silage or hay off you
makes no difference to him , then when you are over 40 it would be easier to have a tax efficent rental income (if it is still there)

And I would advise not to do the above, there are plenty of Ag officials current scratching their lala's and this is one area that they could get browny points if they so wished.

Off course you could inflate the rent of the land (so much per ac + SFP on top) and give him the entitlements for free IYKWIM.

Sounds like you have an idea tenant so do your best to hold onto them. A handshake would still work for me, as if you have no word ,no matter how much paper you have it wont make a difference

tommylimerick

i don t understand why bobcharles
it is not illegal
and on paper he is still a farmer which means he can claim some fuel phone etc. off his tax bill
also it looks like 2014 might be some kind of reference year
so if you are not farming the land you could well lose the sfp which in your case is greater than the actual rent

bob charles

tommylimerick wrote: »

i don t understand why bobcharles
it is not illegal
and on paper he is still a farmer which means he can claim some fuel phone etc. off his tax bill
also it looks like 2014 might be some kind of reference year
so if you are not farming the land you could well lose the sfp which in your case is greater than the actual rent

it is illegal, going by the book you have to be an active farmer to claim SFP. I you do as you propose it would be very easy to prove the OP was in fact not an active farmer. Proceed with caution with such an agreement. I wouldnt touch such a agreement with a barge pole.

FarmerSmith

DMAXMAN wrote: »

the concept of un-earned income went out years ago. you are allowed 32k at low rate and the rest at higher rate iirc.as regards costs there wont be many as you are not carrying on the trade of farming

Well that's good news anyway.

FarmerSmith

bob charles wrote: »

And I would advise not to do the above, there are plenty of Ag officials current scratching their lala's and this is one area that they could get browny points if they so wished.

Off course you could inflate the rent of the land (so much per ac + SFP on top) and give him the entitlements for free IYKWIM.

Sounds like you have an idea tenant so do your best to hold onto them. A handshake would still work for me, as if you have no word ,no matter how much paper you have it wont make a difference

I'd prefer to keep it above board (and simple - clueless here remember)

tommylimerick

it is legal .. he would have to have a active herd number and any animals on his land would have to be in his herd number
as for who herds those animals no-one knows
selling off the surplus grass via silage or hay goes on all the time
the sfp might be area based post 2014 so if you are the active farmer of those lands in 2014 the sfp would be in your name where as if you offically lease the farm to someone else the sfp might very well be theirs post 2014
i don t see the problem ....

funny man

tommylimerick wrote: »

you could also lease it to your friend unoffically
by that i mean you and your friend agree a price on the rent of the land
he puts animals into your herd number and you draw your own sfp
this might be very relevant with the new sfp coming
plant the bog with trees which will be tax free income
get your friend to pay the lease money as if he bought silage or hay off you
makes no difference to him , then when you are over 40 it would be easier to have a tax efficent rental income (if it is still there)

know where your coming from but don't you have to have claimed SFP in 2011 to qualify under the new proposals, he might run the risk of losing the SFP for both of them, as Bob said make a deal and shake on it if he is a friend.

Farmer Pudsey

tommylimerick wrote: »

it is legal .. he would have to have a active herd number and any animals on his land would have to be in his herd number
as for who herds those animals no-one knows
selling off the surplus grass via silage or hay goes on all the time
the sfp might be area based post 2014 so if you are the active farmer of those lands in 2014 the sfp would be in your name where as if you offically lease the farm to someone else the sfp might very well be theirs post 2014
i don t see the problem ....

It is one of the things that the department are looking at clamping down on at one stage did a document go out regarding B&B where it was considered that you had to be farming at you own risk to collect was it the DAS they could change it to SFP very fast and make it retropective,

LivInt20

tommylimerick wrote: »

it is legal .. he would have to have a active herd number and any animals on his land would have to be in his herd number
as for who herds those animals no-one knows
selling off the surplus grass via silage or hay goes on all the time
the sfp might be area based post 2014 so if you are the active farmer of those lands in 2014 the sfp would be in your name where as if you offically lease the farm to someone else the sfp might very well be theirs post 2014
i don t see the problem ....

Off course it is illegal.

If you own the animals they must be in your own herd number, not somebodies else.

All sorts of major issues regarding disease control. A total no no.

As for the tax evasion issues...

freedominacup

DMAXMAN wrote: »

the concept of un-earned income went out years ago. you are allowed 32k at low rate and the rest at higher rate iirc.as regards costs there wont be many as you are not carrying on the trade of farming

You're right I got that wrong completely.

bbam

tommylimerick wrote: »

it is legal .. he would have to have a active herd number and any animals on his land would have to be in his herd number
as for who herds those animals no-one knows
selling off the surplus grass via silage or hay goes on all the time
the sfp might be area based post 2014 so if you are the active farmer of those lands in 2014 the sfp would be in your name where as if you offically lease the farm to someone else the sfp might very well be theirs post 2014
i don t see the problem ....

Indeed you don't..
But this exactly the sort of "armchair famring" that is ruining the whole thing. The SFP is a support for ACTIVE farmers, not lads pulling a fast one and pretending to be farming just to suck more money out of the system. Personally I think this is fraud and should be prosecuted as such.. No different than lads on SW working for cash nixers, maybe you don't see a problem with that either?.. :mad:

Muckit

http://www.thesundaytimes.co.uk/sto/news/uk_news/People/article1224248.ece

I was reading this story in Farmers weekly how your man who invented the Dyson vacuum cleaner has being buying up huge amounts of land in the UK, apparently for tax reasons. Very interesting....