Agriculture & Rural Spring Briefing Paper

 1.            Land and Buildings Transaction Tax from 1st April 2016

A surcharge of 3% of that part of the  purchase price reasonably apportionable to dwellings will be payable in Land and Buildings Transaction Tax if you purchase a Farm or Croft which includes any residential dwellings in addition to your main residence.    Multiple property relief will be available if there are 6 or more dwellings on the farm.

 2.            Voluntary Registration of Land – Do It Now!

Many farm titles are not registered in the Land Register of Scotland but are in the old Sasine Register.   The Scottish Government have stipulated that all land titles must be moved to the Land Register within 10 years and those that are not moved voluntarily will be forcibly registered by the Land Register.    We recommend that you choose to undertake a voluntary registration now because it means you, rather than the officials at the Register, are in charge of the process. You know your own land and you will have input into the mapped boundaries and the mapping of access routes and water sources.   Where there are potential areas of disputes or clashes with neighbouring boundaries it means that you will be part of the registration process. There may potentially be an advantage in being registered ahead of your neighbours. It gives you also an opportunity to formalise access rights that have been exercised for more than 20 years that may well not be specified in your current title.

 3.            Neglected Land and a Community right to purchase – be aware.

The new Community Empowerment (Scotland) Act 2015 contains a right of a Community to force the owner of abandoned, neglected or detrimental land to sell the land to the Community.   Such land is likely to be on the fringes of a Community and if your farm marches with a village boundary we recommend that you make sure that there are no areas of unproductive land that may appear abandoned and therefore potentially subject to acquisition by the local Community.

 4.            Residential Letting

Many of our farming clients rent out cottages under Short Assured Tenancies.   The Private Housing (Tenancies) (Scotland) Bill is presently going through Parliament and the Bill introduces substantial and important changes to the current residential tenancy regime. No longer will Tenants have to leave at the end of a lease.

Tenants will have security of tenure and can only be removed if either they agree to go or if the Landlord is able to establish one of 16 grounds for eviction.   Establishing the 16 grounds for eviction will require an application to a Tribunal and the Tribunal will have discretion on whether or not to terminate the tenancy in situations where (1) the property is being sold by a lender who has repossessed it (2) there are alleged breaches of the Tenancy Agreement, (3) rent arrears of 3 consecutive months or (4) there is alleged anti-social behaviour.   The remaining grounds are mandatory ones.   You should also bear in mind that the rent may not be increased more than once a year and that there is a requirement to serve a rent increase.

If the Tenant is unhappy at the increase they may refer the matter to a rent officer with right of appeal to a Tribunal.

It’s also worth remembering that you need to check your Tenant’s passport to ensure they have the right to reside in the UK or, potentially, you will be fined.

 5.         Succession Planning

The Succession (Scotland) Bill passed earlier this year made key changes to the law of inheritance in Scotland but didn’t address one of the most important issues included in the government’s consultation process, particularly affecting agricultural clients. Indications are that, whatever new provisions are introduced to deal with the rights of spouses, civil partners and children to a person’s estate on death, the distinction between heritable and moveable property will be removed.  Under the current law children are entitled to claim a proportion of their parents’ moveable estates (known as legal rights) but have no claim on heritable property, i.e. land and buildings.  This allows farming clients to pass their land onto one of their children without fear of their other children raising a claim against it.

The removal of this distinction will mean that any claim which may be available to a child will take into account heritable property.  For land rich, cash poor estates this could result in a claim against the estate which can’t be met without using the land to raise funds, whether by sale or by mortgaging.  For farming families intending to pursue the traditional route of passing the farm to their eldest son it will be extremely important to take advice to ensure that any claims can be anticipated and prepared for.

If you would like any further information on the above or would like to meet with our agricultural and rural team please contact us.

Stuart Gibb, Agriculture & Rural Property t. 0141 248 3434 sg@wjm.co.uk

Angus MacLeod, Commercial & Family Business t. 01463 234445 agm@wjm.co.uk

Ian Macdonald, Inheritance, Wills & Powers of Attorney t. 0141 248 3434 IM@wjm.co.uk

Susan Hoyle, Family Succession Planning & Tax t. 0141 248 3434 sjh@wjm.co.uk