Before a major storm hits, Farmers know to secure all buildings and tie anything down that might blow away.
They park machinery well away from barns and other structures. They check for any loose slates on the roof.
All the signs are there that an economic storm is brewing with the first clouds closing in and due to hit on March 11 - a little earlier than expected.
Landowners and Farmers have long known of the potential impact of leaving the EU, the loss of farming subsides over time and the uncertainty of future global trade agreements.
But less-telegraphed changes to Inheritance Tax policy are heavily rumoured for inclusion in next week’s Budget, changes which have the potential to wipe out whole estates.
It might be time for landowners to move their assets to a sheltered and secure area away from any “falling trees”.
Heads in the sand
There is heavy speculation that Agricultural Property Relief (APR) and Business Property Relief (BPR) will be removed in the Budget next week.
Inheritance Tax reform is often floated pre-Budget but is often watered down somewhat on the day. However, after an All-Party Parliamentary Group report on ‘Intergenerational Fairness’ (January 29) urged the Government to reform a "complex, ineffective, distortionary and unfair system”, government action on now more likely than ever before.
Fairness and ‘leveling up’ is the new political battleground. This Budget will be dominated by measures that support this Government narrative so it’s easy to see why Inheritance Tax and APR is so ripe for reform. Why should the ownership of farmland have largely escaped having major tax reforms imposed on it for so many decades?
The impact on estate owners, farmers, family businesses and investors in agricultural land will vary. For those with their heads in the sand it could put the entire structure of estates under threat of extinction.
Imagine you’re a 92-year-old landowner with 5,000 acres in Norfolk worth £40m. You’ve assumed you would be entitled to APR on all 5,000 acres. Instead your family might now receive a £16m tax charge at the end of your life. Worse still, your 70-year-old son then passes on a year later. Another £10m bill and the end of the family estate forever.
Not since the days of Death Duty have landowners faced such an existential threat.
Family farmers, both young and old, approaching the end of their careers must urgently look at the structures of their land holdings and businesses.
Brexit, future trade arrangements and the impact of the proposed Environmental Land Management (ELM) scheme announced last week make this important but these widely floated Budget measures now make it urgent.
Even if the Government row back form major tax reform on March 11 there can be little doubt that wholesale change is on the way.
Speed is of the essence
Those who haven’t bought agricultural land for tax planning reasons might well be fine. They will need to change their business structures, work out what they should do next and focus being good at what they do: farming.
But landowners living in Chelsea who have never even stepped on their £10m landholding should quickly re-consider the rationale for having bought a farm in the first place.
It’s the potential removal of BPR at the same time as APR that would be a real game changer. It would make any motivation for owning farmland for non-farming purposes obsolete.
Land values will now diverge further. Good quality, productive land will stay in demand and continue to be farmed by really good operators. Lower and mid quality land, which might also struggle to provide any environmental benefits in the new world of ELMS, is about to lose a critical group of buyers from the market.
Beat the weather
Many farmers might rightfully ask: is farming really going to be any different in five years’ time?
It’s a fair question. Each time there has been the likelihood of significant change in the past - and people thought things would be different - farming has remained largely the same. This time it feels different. There are political, economic, environmental, social and climatic influences all coming together – the perfect storm.
Farming incomes are down, rents are about to follow. Farmland will come to the market because the banks won’t support high levels of borrowing secured against it. There is now no necessity for investors to transfer non-farming assets into farmland.
Ironically, in this new era of radical change, Bidwells’ advice to land buyers remains largely unchanged. Investment in farmland is still right for the right reasons.
The most successful farmers will be the ones with their heads out of the sand, continually reviewing business performance, taking good advice and not afraid of making bold decisions - whatever the weather.