Succession Planning and Brexit
So the votes are in and we wake up to the realisation that the United Kingdom has decided to leave the EU. Any commentator’s views on what the future now holds is of course pure conjecture as no nation as large as ours has ever left either the EU or any other major trading alliance. ‘Uncertainty’ is going to be over-used for many months and years to come and will bedevil all legal, accounting and financial advisers when it comes to trying to now give best advice to clients.
During the campaign, the Chancellor, George Osborne (who remains the Chancellor while I write this articlet!) suggested that the economic shock to the country caused by a Leave decision would require the introduction of an emergency budget. Many disbelieved him and there was of course an immediate backlash from the Leave wing of the Conservative benches threatening to vote down such a Budget. However, we now know that David Cameron will no longer be Prime Minister come the Autumn and it seems almost as sure as night following day that the new Prime Minister will appoint a new Chancellor.
Why does this matter for Succession Planning? Well for several reasons, but three immediately spring to mind:
- If the economy does slip back into recession there will be enormous pressure on whoever the Chancellor is to raise taxes and/or cut spending. In the Inheritance Tax world, farmers are treated as a special case, attracting both Agricultural and Business Property Reliefs. Will these continue and if so, in what form?
- Capital Gains Tax rules are also very favourable to all business owners, including farmers, with the recent trend in the last Budget being a reduction in tax rates. Will these generous reliefs continue unabated?
- Farming subsidies, in many cases, allow farmers to maintain the family inheritance by keeping the trade going. All my farming clients put a great amount of effort into building the capital value of their assets, supported by those subsidies. These are clearly going to be affected long-term so what will now happen to the underlying capital value of the assets?
I am afraid there are many more questions than answers and it is inevitably going to be a case of watching and waiting to see how the forthcoming negotiations progress and the economy handles the process in the meantime.