Clayton & Brewill’s farm accountancy specialists share six tips to help farmers pay less tax and manage their accounts effectively.
Despite the difficult weather over the past three years, farming has generally survived the recent recession well, proving to be one of just a handful of industries to deliver ongoing growth.
Against the backdrop of a generally positive picture, we highlight Clayton & Brewill’s five top tips to help farmers and rural businesses minimise their tax payments and maximise their savings.
1. Make the most of your capital allowances.
From April 2014 you can invest up to £500,000 in new plant, machinery and equipment – ensuring you can make considerable tax savings. Time is of the essence as the limit will plummet to £25,000 at the end of 2015 so take care to ensure you can make any planned investments between now and December 2015.
And don’t forget you can also include professionals’ fees in your capital allowance claim, for example architect fees or planning costs.
2. Don’t pay more income tax than you need to.
It might sound obvious, but are you offsetting all the relevant expenses associated with running the farm? Ensure you record and offset home office expenses, travel costs, and accelerated depreciation for new equipment.
Equally, analyse your business performance for the current year to check that the instalment of income tax due on 31 July is still appropriate. If income has fallen then your tax liability will be lower and you can reduce your payments on account.
3. Take advantage of tax breaks for diversifying.
There are some useful capital gains tax reliefs available for rural businesses that are looking to diversify into new markets. The Enterprise Investment Scheme and Seed EIS both offer tax reliefs to businesses that need to raise finance to grow.
4. Don’t leave succession planning to chance.
Recently we have seen some depressing situations where farmers have been forced to sell of parcels of land to raise funds to pay unexpected (or unplanned for!) tax bills. By talking through succession planning options with the family and keeping on top of your inheritance tax planning, you can help to reduce nasty surprises further down the line. This is particularly important if you are facing a change in circumstances that could affect your tax planning.
5. Prepare early for the new workplace pensions.
Known as ‘pension auto-enrolment’ the new regulations around workplace pensions will start to hit small and micro businesses during 2016 and will mean you will be legally obliged to provide a pension to all eligible members of your workforce. Our experience with larger businesses has shown that a minimum of 12 months is needed to help to mitigate the costs and manage the process.
Clayton & Brewill’s auto-enrolment specialists can help you understand the steps you need to take – including how to make use of the option to postpone your start date.
6. Join Clayton & Brewill and The Andersons Centre on 23 October
As part of our commitment to helping our rural clients pay less tax and manage their accounts effectively, we will be running a free seminar with farm business consultants from The Andersons Centre. The seminar will be mid-morning on Thursday 23rd October and topics will include capital allowances, succession planning and pension auto-enrolment.
For more information on the seminar please email us or call 0115 950 3044.
Need help with your farm accountancy?
Clayton & Brewill helps numerous farmers and rural businesses across the East Midlands. If you would like friendly, insightful and supportive advice to help you pay less tax, manage your accounts, file your annual returns or process your payroll, please do get in touch and we’d be pleased to help. Call Clayton & Brewill on 0115 940 3044 or send us an email.