Are pop-up campsites a good diversification option for your farm?

As all farmers will know, changing financial landscapes and consumer demands are increasingly prompting landowners to explore alternative sources of income.  With the rise in popularity of outdoor recreation and the growing trend towards UK based, eco-friendly tourism, enterprising farmers are tapping into the potential of their land to offer temporary camping accommodations.

What are pop-up campsites?

A pop-up campsite is a temporary campsite that springs to life for a limited time. Under the Town and Country Planning (General Permitted Development)(England) Order 2015 (otherwise known as the GPDO), there are permitted development rights which enable those with the available land to use it as a temporary recreational campsite for up to 60 days a year, often during peak seasons or special events.

Pop-up campsites tend to offer only basic facilities given their temporary nature, such as a stand-pipe and portable toilets / shower facilities.

What are the Inheritance Tax (IHT) consequences of a pop-up campsite?

Given the value of land, particularly in the South East, ensuring any diversification undertaken on your farm does not negatively impact the availability of Agricultural relief (AR) and / or Business Relief (BR) from IHT is crucial.

A key requirement for AR is that agricultural land is used for the purposes of agriculture, which a pop-up campsite is clearly not.  Having said that, it is accepted that temporarily using agricultural land for a pop-up campsite will not result in a loss of AR per se provided that the use is indeed temporary and does not negatively impact the overall agricultural plan for the land.

AR is limited to the agricultural value of the land in question.  If use of the land as a pop-up campsite contributes to the land having a value over and above the strict agricultural value, BR can often be used to bridge that gap.

The well known ‘Balfour matrix’ is the standard test for the availability of BR in relation to a farming business / landed estate.  A full review of the matrix is beyond the scope of this article but the main gist of the matrix is that BR will be available in full (including on assets / values that are not covered by AR) in relation to a farming business provided it is a single business, even if it has multiple components, and it is mainly run as a trading business for the purposes of income generation.

Businesses that include an element of land exploitation have long been a thorny area when it comes to assessing the availability of BR as HM Revenue & Customs contend that rental income generated by land is no different to dividend receipts or bank interest as it is generated purely as a result of owning land as an investment rather than as a result of trading.

Given income generated from pop-up campsites is, by its very nature, limited in duration the likelihood is that this income alone will not adversely impact the ‘mainly’ test in the Balfour matrix as the majority of the farmers’ income will still be derived from strictly trading activities.  If, however, following other diversification schemes, the farmer in question already receives substantial non-trading income, such as rent from farm cottages or holiday lets, then this additional ‘investment’ income will need to be carefully factored in.

If the treatment of the income is a concern in your particular circumstances there are steps that you can take to try and ensure that the income generated by a pop-up campsite is treated as trading income rather than investment income, however, the tests are stringent and the farmer in question will need to provide substantial additional services over and above the provision of the land itself to meet this test.  How practical this is for a temporary campsite provision is debatable.

What are the planning requirements of a pop-up campsite?

Before you consider whether this type of diversification is right for you, you may want to consider the hoops in the planning regime through which you will have to jump before you can ‘pop up’ your tents.

Although the use is ‘permitted’ under the GPDO, this simply means that you do not have to go through the full application process for planning permission, which would include publication of your application, notification to and consultation with neighbours and other statutory bodies. It is, essentially, a trimmed down version of applying for permission to the Local Planning Authority (“LPA”).

There are, however, certain restrictions and conditions that need to be satisfied in order to be able to benefit from this type of temporary permission. As a starting point (and important for assessing whether it is a worthwhile venture, financially), the land cannot be used for more than 50 pitches but you can place a moveable structure on the land which is reasonably necessary for the purposes of a campsite (e.g. toilet or washing facilities). Motorhomes, tents, yurts, pods and huts are all permitted (as long as they are of a temporary construction, of course), but not caravans.  The 60 day restriction will probably limit the type of accommodation you are willing to offer and it may be that a DIY/BYO style of camping would be more suitable (and viable).

You cannot take advantage of this permission on sites which are on the site of a scheduled monument, in a safety hazard area, in a military explosives area, on a SSSI, or on the site of a listed building.  The words “on the site of” are important to note here, as this may include land which isn’t necessarily listed itself, or even “in the curtilage of” a listed building (an entirely different concept in planning law).

There is also a requirement to provide on-site toilet and waste disposal facilities, the details of which must be provided to the LPA each year, before commencing the use, identifying the location of the facilities on a site plan and informing the LPA of the dates that the site is going to be used as a temporary campsite.

If the proposed campsite is in Flood Zones 2 or 3, there is also a requirement to apply to the LPA for Prior Approval of the use, along with a properly commissioned site-specific flood risk assessment. The LPA will then consult with the Environment Agency and both are required to respond to the application within 56 days, in default of which you can proceed to commence the use.  So, from a timing point of view (if Prior Approval is required), it is important to be prepared and submit the necessary application at least 57 days before you would like to start using the land as a temporary campsite.

It should be noted that if the LPA does give Prior Approval within the 56 days, it can do so subject to conditions which are reasonably related to the subject matter of the Prior Approval, i.e. flood risk, warnings to occupants, and evacuation procedures, so be prepared to take additional measures where conditions require it.

The consequence of not complying with the GPDO is that the LPA would be entitled to serve an Enforcement Notice for a breach of planning control.  If that Enforcement Notice is not complied with (or appealed), the LPA are further entitled to issue a summons which instigates criminal proceedings in the magistrates’ court. Once at court, if convicted, the penalty is a fine which is calculated by taking into account the income received from the unauthorised activities. You would also be liable for the LPA’s costs of taking the matter to court (as well as your own).

Other practical considerations

Although outside the main scope of this article it is worth pointing out a number of other practical considerations that should be looked into if you choose to go down the pop-up campsite route.

• If you are a tenant of the land, is a pop-up campsite permitted in your tenancy agreement or is your use restricted to agricultural use only?
• Will your gateways / high traffic areas stand up to this additional use, particularly given the recent trend towards wetter winters? Should you consider mats for gateways for example?
• How will the additional rubbish generated by the campers be dealt with?
• You will need to ensure that your insurance provider is notified of your plans and you will need to carefully check that a pop-up campsite does not contravene any of your existing insurance requirements. You should also ensure that you have sufficient insurance cover, both in relation to risks covered and the level of cover
• You should ensure that campers clearly know where they are allowed to go on your farm. Farming is a dangerous vocation and you do not want campers accidentally accessing areas of the farm that are particularly dangerous, such as areas with heavy machinery, livestock or slurry pits.

Conclusion

Pop-up campsites can offer a low-impact way to utilise agricultural land allowing you to generate additional income without compromising your primary agricultural activities.  They can also provide opportunities for rural communities to thrive by attracting visitors who support local businesses, from farm shops and markets to pubs and attractions.

As ever with any diversification plan, the advice is to carefully consider all of the consequences of the plan and take appropriate professional advice prior to implementing your plan.

For advice on the financial implications of diversifying your farm, please get on touch.