14 February 1997

Arable unit includes ample tax relief benefits

ENABLING a purchaser to benefit from various tax reliefs, a mainly arable unit is for sale subject to a lease or contract back to the vendor for up to 10 years.

Including grain storage for 3000t and a farmhouse, the 615-acre Milton Farm, Pewsey, Wiltshire, is currently owned by Andrew Brown who will use the sale proceeds to expand onto another unit increasing his total farming acreage to 2000 acres.

Guided at around £1.8m, a purchaser would achieve a profit share equating to £90,000 – representing a 5% return on capital, while also in a position to take advantage of reinvestment relief and current rules for exemption from inheritance tax.

However having recently completed a similar deal privately for a seven-year term, the purchaser paid the full vacant possession value which in this case would be nearer £2m, says Rupert Montefiore of Savills, handling the sale.

"So far this type of deal has appealed to mainly businessmen either having sold a company, or with funds from the sale of stocks and shares, and more recently the farmer who having sold land for development wants to wait a few years before buying another farm.

"Effectively the purchaser is buying with a 40% discount, by sheltering his liabilities for gains tax," he says.n