Facing up to succession issue

TOM O’FARRELL, Partner at Ifac Galway looks at what farmers should be doing to plan for the future – it is better, he advises, to address the ‘succession scenario’ sooner rather than later.

FARM incomes are low, with profits often relying on subsidies, and farm families requiring off-farm income to support their households – a trend that has been growing steadily year on year.

It is not surprising, therefore, that concern about viability is the top reason farmers cite for not having a plan.

However, although they are cash poor, average land value across Ireland is around €9,072 per acre, potentially putting the value of a 33-hectare farm at circa €740,000, depending on the region.

Without a plan, you could be lining up substantial costs for yourself and your successor where assets of this value are being transferred. Planning ahead allows you to avail of reliefs that can enable farmers to transfer assets to family member’s tax free.

The first step in succession planning is to clarify your wishes, taking into account whether or not you have a successor, whether you want to continue to be involved in the farm, and what financial provision you need to make for yourself and other family members.

Issues that need to be considered include:

■ Your future income. You must look after your own security and that of your spouse before you divest your assets.

■ Income tax implications of exiting the business or altering the farm structure.

■ VAT that may be incurred as a result of the transfer.

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