The announcement recently that it was Yorkshire Day week reminded me how fortunate we are to live in East Yorkshire, a beautiful area of the country which to most people is just a road to the coast. Yes we have the weekend migration of Wessies (of which I am one!), or as I have recently been informed, “comforts” (Cum for’t day!) and dare I say the odd tractor or combine holding us up but for the most part it takes some beating.
However in reality we are all living in an age where life in general and farm prices in particular are dictated by world events and whilst the local farmer can do what he can to cut costs and consider diversification, he sows his crop each year with little or no idea as to the price and quantity of the end product.
Whilst I am far from being a farmer I do at least know that winter wheat is not harvested in the winter, unlike an agricultural bank manager I came across a few years ago!
Finally I would like to share with you some ideas which may be of interest to you:
Firstly, please ensure you have one, secondly review them at a minimum of 5 year intervals and finally do not leave everything to siblings for them to sort out an allocation – it doesn’t work and leads to family arguments and professional fees that could easily be avoided.
For sole traders and partnerships moving from 31 March / 5 April to say 30 April means that the final tax payment for a year is 11 months later than it would have been. For arable farmers consider 30 June, normally the previous year’s harvest will have been sold making the valuation easier and you obtain a similar extension in respect of tax payments for the self-employed.
For family companies a maximum salary of £11,000pa supported by dividends reduces the 25.8% employees and employers National Insurance that is otherwise needlessly payable.
Now there is no tax relief on the fabric of most agricultural buildings and all farm land consider buying assets in a pension fund. The funding required can potentially be tax deductible for companies and reduce higher rates of tax for the self-employed.
Potentially 100% Inheritance Tax relief may be available on business assets on death, with an uplift to market value for the beneficiary. Equally hope value on land owned personally but used in the business may only attract either 50% or 0% Business Property Relief, so it is important to get this right.
Company v Partnership
Why not have both? A modest trade through the partnership funding cars and farmhouse expenses and a company running alongside taking the bulk of the profits at a 20% tax rate irrespective of the level of profits. This is a tried and trusted model and it does not mean the company has to own the farm land.
Countryside Stewardship Scheme: Simplified Options