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Father's farm

09 June 2015
Issue: 4505 / Categories: Forum & Feedback

The tax-efficient means of transferring farmland on a partnership change

I act for a father and son farming partnership. About 200 acres are farmed and the land is in the father’s name although it is shown on the partnership’s balance sheet and is in effect included in the father’s capital account.

The father now wishes to transfer the land to his son for £250 000 and would retire from the partnership at the same time if advised to do so.

A disposal of land for £250 000 would trigger a stamp duty land tax (SDLT) charge of 1%. However if this is treated as a transfer of the father’s partnership interest in exchange for withdrawing £250 000 from his capital account it seems that no SDLT may be due.

If the partnership cannot find the cash to pay out the father the son could introduce funds to cover this perhaps over a few years....

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