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A sole trader farmer owns a farmhouse and 160 acres of farmland. The intention is that he will rent the land to his brother who will farm it, but what is the most tax-efficient manner in which to do so?
We act for a sole trader farmer who owns a farmhouse and 160 acres of land. He has recently sold his beef animals and now intends to “rent” out his land to his brother.
The brother will use the land for silage and for grazing his own cattle and he will also have the use of various outbuildings which will be used for young stock etc. However our client will keep the single farm payment.
We are concerned as to the correct types of agreement that our client should enter into to preserve any capital gains tax reliefs on a future intended sale in three years’ time. It seems to us that we have the following options.
- No agreement and we treat the income from his brother as sales of grass crop and contract-rearing heifers.
- A formal grazing agreement for the...
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