Here’s some free advice! A list of things we think you need to think about in your farming business, or any other business for that matter:


Inheritance Tax


  • Make sure that you have a tax efficient Will structure. If you have a mixture of taxable assets and other assets on which you can claim reliefs, it is unlikely that leaving everything to the surviving spouse on first death gives the best tax position. A flexible Will Trust could give all sorts of benefits.


  • Make sure that your partnership or shareholders’ agreement provides for vacant possession of farmland owned outside the partnership within 24 months of death so you can claim 100% Agricultural Property Relief or Business Property Relief.


  • Your partnership agreement should not force a sale of the business interest of a deceased partner to the continuing partners if Business Property Relief is to be claimed.


  • Don’t automatically assume your farmhouse will benefit from Agricultural Property Relief- HMRC might well challenge a claim.


Capital Gains Tax


  • If you are planning a significant disposal of business assets, with the right structure in place you might be able to claim Entrepreneur’s Relief so your tax rate is only 10%.


  • Consider transferring part of your asset to your spouse before disposal so you can use two Annual Exemptions and enjoy £22,000 of the gain tax free.


Income Tax


  • The amount of Annual Investment Allowance is £1,000,000 per annum until 31 December 2020. 


  • Consider the averaging of farm profits.




  • Use trusts to give away assets while keeping control of them. It might even be a way of giving assets away without immediately paying Capital Gains Tax.


  • Putting assets into a trust for your grandchildren might be a tax efficient way to pay school fees.






  • Companies are good way to shelter profits from income tax if you are not going to draw the money from the business. Think about having a company in your business structure.


  • At present people tend to take a mixture of salary and dividends. Be aware of the "Disguised Remuneration" laws that could mean HMRC argues that dividends are really earnings. 




  • Make sure you charge VAT at the standard rate if you let any buildings that your tenant uses for the purpose of storage. E.g. buildings let to builders, tree surgeons etc.


  • If you make any supplies that are exempt for VAT, such as letting buildings (not for storage), make sure you undertake and evidence partial exemption calculations each time you make a VAT return and at the end of your VAT year.


  • Talk to your accountant before you start any project such as converting redundant farm buildings to let or to live in.




  • If you reimburse expenses to employees do you have a P11d dispensation in place to avoid year-end administration? You should also have a dispensation if you are a director of your own company with no other employees.


  • Are you aware that there is no longer any such thing as a "casual" worker? Normal payroll provisions apply to just about everyone now.


As you probably realise, much of the advice is likely to need a specialist to execute it so always talk to us or your own accountant before acting.


As the legislation changes good advice is likely to change with it so we will be updating this when appropriate.

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Fraudulent tax demands and refunds

MTD takes effect for all VAT returns beginning on or after 1 April 2019. This means all VAT returns must be filed electronically using compliant software and not just by entering figures through the HMRC portal as might currently be the case.

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