The government’s Agricultural Bill is currently passing through Parliament, and represents the largest overhaul of UK farming policy in the past 50 years. Many commentators believe it also herald’s the beginning of the end for the traditional support from the public which our farming community in particular, has historically enjoyed.
The Bill sets out the government’s plans to abolish direct payments to farmers. Instead, farmers will be expected to follow a new system of ‘public money for public goods’ which will reward farmers who follow environmental issues rather than those who produce food.
This move away from direct agricultural support will have far reaching effects on many Cheshire farmers and their accounting processes.
“It’s important that agricultural businesses reassess their assets,” said agricultural accounting expert, Lindsay Beeston, “and make sure income earning potential is protected separately to agricultural input.” In the run up to the Bill’s final approval, now is a good time for landowners to check who owns the land they farm on, and question if there are any restrictions in the conveyance over its use.
“Take account of all your buildings,” advises Lindsay Beeston, “ including those currently out of use or dilapidated. Can any be brought back into use without impacting on your existing business? “For example, some of the land currently owned may generate a larger income-stream from sporting use,” said Lindsay Beeston, “and any woodland owned may be incorporated into a separate business.”
It’s also important that tenant farmers review their current arrangements. Find out which areas are held under a Landlord and Tenant Act, Agricultural Holdings Act, Farm Business Tenancy or other licence.
Long term plans for your land and buildings should also be considered.
Could there be any potential for housing development? The process of obtaining planning permission is often arduous and expensive, but with the correct strategy planning permission is usually possible.
And finally, advised Lindsay: “Remember, any kind of diversification can have an impact on your tax liabilities. Agricultural Property Relief may not be available once the Bill is passed, but the resulting asset may qualify for Business Property Relief. The income stream generated from the new venture may be classed as business income or investment income, so it’s important that this is clarified for tax liabilities before the new venture is started.
Long term, it could also affect your inheritance tax liability.
If you would like to discuss any of the points mentioned, please contact Lindsay.Beeston@affordbond.com or complete the Contact Us form on our website. Remember, all businesses should have an annual accounting and tax review of assets to ensure that earning potential is maximised. Talk to our tax experts today, and protect your business.