Weaker Pound Leads to Higher Subsidy Payments

Basic Payment Scheme

Basic Payment Scheme payments for 2017 will be just under 5% higher than in 2016 due to the currency exchange rate.

Under the rules of the Common Agricultural Policy (CAP), support payments for the UK are set in Euros and then converted to Sterling  by using the average exchange rate across the month of September.

It means that the payments made this year will be at their highest exchange rate since 2009, which will surely be a welcome boost for UK farmers.

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

Rural Payments Agency Risking Wrath of Farmers

Basic payment scheme.jpg

The Rural Payments Agency (RPA) has managed to spark outrage with its latest gaffe.

More than 600 letters have been sent out to farmers who they think were overpaid under the Basic Payment Scheme in 2015 or 2016. The fact that really grates is that some claimants have been waiting more than 18 months for their underpayments to be rectified. In some instances, this is understood to be worth tens of thousands of pounds.

The Basic Payment Scheme is the biggest of the European Union’s rural grants and payments designed specifically to help the farming industry. Claimants apply once a year – usually in May – and payments begin in December.

However since the scheme began in 2015 it has been fraught with problems, with the majority of payments being late from the off.

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

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.

The Importance Of The Rural Economy In Wales

ID-100333293

Rural Businesses contribute more than 440,000 jobs and in excess of £13 billion to the Welsh economy.

Do your Assembly Members know how important the Rural Economy is in Wales?

If you want to keep them informed or register your concerns you can email both your individual and regional AM’s (there are 5 in total) and can find their details here.

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

Image courtesy of phaendin at FreeDigitalPhotos.net

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

Basic Payment Scheme – Are You Ready?

A_farmer's_work_is_never_done_-_geograph.org.uk_-_1429332

Farmers are being reminded that the 2015 deadline for applying for the new Basic Payment Scheme is now fast approaching.

There has been some pressure on the Welsh Government to extend the May 15th deadline (as granted in England) but there is no sign of this happening. Applicants should complete and submit their forms earlier rather than later.  In fact, extending the deadline may not be beneficial, as this would undoubtedly delay the first payments, currently expected in December 2015, and this could cause some strain on farmers’ cash flow.

Using the on-line Rural Payment Wales application is also recommended where possible. There have been some minor issues with the on-line system, but it is generally robust and easy to use. It provides a way of submitting more accurate data, hence saving on wasted application time where paper forms have been incorrectly completed. However, for those having difficulty with access to adequate Broadband (still a problem in many rural areas), it is still not too late to apply by post.

For any further help or advice, contact Green & Co.

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

Capital Losses On Single Payment Entitlements

www.greenandco.comIf you have made a Capital Gain selling assets it is important to check whether you can save tax by using the Capital Losses from purchased Single Payment Scheme entitlements.

In Northern Ireland, Scotland and Wales all Single Payment Scheme entitlements ceased to exist on 31 December 2014. This means that the cost of purchasing those entitlements is now a Capital Loss which is allowable against other Capital Gains made on the sale of assets.

However in England the Single Payment Scheme entitlements were converted to the new Basic Payment Scheme entitlements so there is no Capital Loss.

It just goes to show – England don’t always win!

For more information, contact us.

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

Greening In Wales

www.greenfarms.biz

As part of Common Agriculture Policy Reform, farmers need to demonstrate compliance with Greening measures to receive Basic Payment in 2015 in full, 30% of the payment made of this Greening element.

The Welsh Government have just published a Guide to the Greening Rules which will not be a quick read for most.

The Key points are:

  1. Crop Diversification
  • If 10 – 30 Ha of arable land – need at least 2 arable crops (main crop not more than 75% of arable land).
  • 30+ Ha of arable land – need at least 3 arable crops (main crop no more than 75% and 2 main crops not more than 95% of arable land).

A full list of eligible crops is now published  (note: arable land includes fallow land and temporary grass of less than 5 years).

There are a list of important exemptions including:

Exemptions for those with more than 75% of eligible agricultural land as grassland  (permanent and temporary) and for those with more than  75% of arable land as temporary grassland and fallow.

  1. Ecological Focus Areas (EFA)

Basically, farms with over 15 Ha of arable land will need 5% as EFA. Features eligible for EFA are fallow, hedges, stone walls, short rotation coppice, afforested land and nitrogen fixing crops.

Again there are exemptions e.g. if more than 75% of eligible agricultural land is grassland (permanent and temporary) or if 75% of arable land is temporary grassland, fallow and legumes.

Details are now published of how to calculate EFA area for the linear features (hedges and stone walls).  The complexity continues as it depends whether hedges border arable land or permanent grass.  Welsh Government will want those EFA areas identified by the end of October 2014.

Every farm in Wales will need to assess their Greening requirements on an individual basis, they will need to see if they are exempt or if changes are required to comply. Remember cropping this Autumn will need to be compliant.

We would like to thank David Thomas of Andersons for allowing us to use his article. He can be contacted via email at:  dthomas@theandersonscentre.co.uk