Old Mill is a leading Southwest accountancy and financial planning firm with a long history of supporting farming businesses, landed estates and rural enterprises. Our specialist rural advisers provide joined-up expertise across tax, business advisory, succession planning, financial planning and natural capital, helping rural businesses navigate change and plan confidently for the future. Now as part of Kinbrook Group, we can combine local expertise with national strength.
Why are Old Mill sponsoring EFG?
“Sponsoring EFG reflects our shared commitment to a sustainable, long-term future for the rural sector, one where farmers are properly rewarded for protecting and enhancing our natural environment. As trusted advisors to the agricultural community, our mission is to deliver expert guidance that balances environmental ambitions with real-world commercial strength.” Willem Puddy, Head of Rural at Old Mill
Environmental Assets: Planning Today for Tomorrow’s Opportunities
After two consecutive years of unusually extreme summer weather, discussions around climate change and the role of agriculture have become increasingly prominent. Whether the rural sector is the problem or the solution depends largely on the writer’s agenda. However, there is little doubt within our industry that agriculture is both affected by environmental matters and has the potential to generate income by helping deliver solutions.
A New Income Stream for Farm Businesses
In an ever-tighter cashflow industry, farm diversification through natural capital can provide real answers for some businesses. Helping push forward solutions to a climate crisis also brings a genuine sense of wellbeing. Being involved at an early stage helps farmers shape and create the outcomes the rural community wants to see.
Getting the Structure Right
Whether through a one-off sale or annual revenue streams, the sale of environmental credits or contracts to manage a particular environment each carry their own nuances. How you structure these arrangements can produce quite different tax outcomes. As the market evolves and credit values become established, farmers can better plan for these income streams and, perhaps more importantly, determine where the resulting revenue or capital should sit. This may form part of wider succession planning or help address the requirements of non-farming children.
Inheritance Tax and Environmental Assets
With Inheritance Tax at the forefront of the rural sector’s mind following recent announcements, understanding how this could affect a future estate is increasingly important. Environmental assets may sit outside traditional farming activities, and HMRC has recently consulted on the reliefs available. Valuations and potential reliefs are key considerations to address right at the start of the process.
Planning for the Long Term
As the market develops and transactions become more commonplace, valuations of environmental assets should follow a well-trodden path. However, values will likely change as assets mature through, say, a 30-year agreement. Understanding how that value may evolve is therefore important. Until assets start emerging from the back of agreements, the full range of values involved will remain uncertain. Given this variability, combined with an unknown future tax landscape, getting structures right from the outset reduces future risk considerably.
If you have potential agreements in the pipeline, please reach out for an early conversation with one of our trusted advisers through our website: Accountants, Tax & Financial Advisors in the South West | Old Mill.