There are a number of issues which make farming businesses different from other organisations as far as accountancy and tax planning advice is concerned.
Farming businesses tend to be more capital intensive and the return tends to be lower than with other businesses. This is usually even more extreme if the farm is owned as well which is often the case as many farms are family businesses with a number of generations involved and living on the premises.
Farming profits tend to fluctuate significantly from year to year due to factors which are out of the farmers control. There are many constantly varying factors such as market prices, input costs, weather and disease.
Cwmbran based accountancy firm Green & Co is headed by Nick Park and Ed Gooderham. Founder of the company Hugh Green, and current director Nick Park, who heads the farming division within the company, are both working farmers. Being part of the farming community themselves, they are well placed to give up to date help and advice to their clients.
Nick Park said: ‘‘Farming is a huge part of what we do. My family have been farming on the Gwent levels since 1901, so it’s in my blood. I’m still active in farming, so know how to approach accounting issues when relating to livestock and land. We have a huge wealth of experience in our team to help farmers get the most effective tax advice and guidance on how to run their businesses.’’
The whole team is experienced in dealing with the farming industry and its related tax issues. The firm’s systems are set up to take advantage of specialist tax reliefs such as Farmers Averaging Elections, Capital Gains Tax relief and Inheritance Tax Planning.
Nick Park shared some of his best tips to benefit farmers in 2014:
- Good tax planning. This makes a huge difference to cash flow. On average farmers can save £4,685 in tax.
- Tax Relief. You can get 100% tax relief on almost all Plant and Machinery purchases in 2014. But the rules change next year so expenditure must be planned.
- Tax Credits. Most family farming businesses should make protective claims for Tax Credits. This can be worth up to £10,000 in low profit years such as when the weather is bad or when you purchase Plant and Machinery.
- Personal Allowances. Are all members of the family who help out on the farm paid? If they haven’t used their Personal Allowance this could save up to £2,200 for each person.
- Averaging Elections. There are a number of special tax reliefs for Farmers such as ‘Averaging Elections’ and ‘Herd Basis’. Averaging elections alone saved our clients over £100,000 last year. Are you taking advantage of these?
Nick Park said: “2015 will be the first year of the Basic Payment Subsidy (BPS). It is very important that all land that farmers occupy is shown on their 2014 Single Payment Form so that they are allocated the maximum number of Basic Payment Entitlements. The BPS is an area based payment which is likely to be about £200 per hectare. This will be phased in over five years. If your current rate is significantly different to this you will need to plan for the changes.”