Will Brexit Affect the Value of Your Farmland?

brexit farmland.jpg

Fears have been expressed by some land agents that agricultural land prices may fall in the UK, as a direct result of Brexit.

It is expected that the amount of subsidies, such as the Basic Payment Scheme, will decline once Britain leaves the EU, causing some farmers to re-consider their financial position.  Many are already struggling to make ends meet and a reduction in subsidy support, combined with a predicted interest-rate rise for borrowing, may result in many being forced to leave the industry.

As a consequence the demand for farmland could fall away, with the price per hectare dropping by as much as £1,000, despite it having remained fairly robust so far, at an average of around £7,500 for bare land.

However, even the experts admit it is difficult to predict the full impact of Brexit, with so many other factors coming into play, such as trade tariffs, pricing and food imports.  Post-referendum predictions of economic doom and gloom have not yet come to pass, so those in the industry would be wise not to panic at this stage.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

HMRC Warns Farmers To Declare Subsidies On Tax Returns

ID-100143633

Farmers claiming the BPS are being reminded by HM Revenue & Customs that these support payments must be included on their tax returns to avoid possible fines.

Several farmers have been written to by HMRC reminding them that subsidies are taxable and need to be declared on tax returns.

Some may be worried by the letters, whereas in most cases BPS payments have already been included on the returns. Fines for not declaring income can be up to 60% plus interest, so if you are in any doubt, it is worth asking an accountant to check for you.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of adamr at FreeDigitalPhotos.net

 

Basic Payment Scheme Will Be Flat Rate

Springtime_scene_-_geograph.org.uk_-_383776

It has been announced that the Basic Payment Scheme for Wales will be paid at a flat rate over the whole of Wales by 2019. In addition Welsh Ministers have decided to apply an ‘add on’ known as the Redistributive Payment for the first 54 hectares of a claim.

It is great to have a decision on this, so that the chances of receiving the BPS in good time are improved. However, we do not yet know the details of how it will be applied or whether any groups of farmers will feel that this solution should be challenged as well.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Prepare For Delays In Receiving Basic Payment Scheme

11702540563_45cdb2e171_zDue to the complexity of the new Basic Payment Scheme there is a risk that payments may be delayed which will have a major cash flow impact for farm businesses. The payment window is 1 December 2015 to 30 June 2016.

It is very important to prepare for this as part of your cash flow planning for this year. In particular you may need to arrange extra funding facilities.

NatWest and RBS have just announced that they are making interest only loans available to farming customers across the UK to bridge this gap.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Photo credit: lendingmemo.com