Succession Planning for your farming business…

by Leah McGarvey | 13 Dec, 2020 | Agriculture & Horticulture, Business, Tax

Succession Planning for your farming business…

Now is the time to look at the succession planning for your farming business…

It may not seem it, but the current tax regimes for Inheritance Tax is relatively generous. This is certainly the case when they are compared with the ones that are forecast to come next year.

There is no Inheritance Tax to pay on gifts or bequests between spouses or civil partners. You can give them as much as you like during your lifetime, as long as they live in the UK permanently.

There is also no inheritance tax due on the first £325,000 worth of assets passed on death or chargeable assets given in life.

Reliefs are available for inheritance tax purposes for lifetime gifts of business and agricultural property. This also includes transfers into discretionary trusts.

People you give gifts to will be charged Inheritance Tax if you give away more than £325,000 in the 7 years before your death.

If the giver dies within 3 years of the gift, the recipient pays inheritance tax at 40% of the value when given. There is a reducing amount of inheritance tax due in the next 4 years and if the giver survives 7 years after the gift, there is no inheritance tax due on the gift. These are called potentially exempt transfers (PETs).

Currently, on death, there is an uplift of the value for capital gains tax purposes of assets left to family and other beneficiaries. If the estate has items such as property, these are treated as received by the beneficiaries at their value at the date of death. This reduces any capital gains tax due if they are subsequently sold.

At the moment, values are low, due to Brexit and COVID.

We all know that taxes will need to be raised to pay for the costs of COVID. The government have pledged not to raise income tax, national insurance contributions and VAT. So it needs to look at other means of raising revenue…

It has been proposed that PETs be removed, so gifts in life exceeding the exempt amount would be taxable on the recipient.

The amount that you can gift in life or leave in death without tax being due is currently £325,000. This amount may decrease.

Agricultural and business property relief is another area at risk. It may be that if these tax saving reliefs are available, the capital gains tax uplift on death may not be.

Lewis Brownlee can help you with your succession planning. We can sit with you (socially distanced, of course) and help you decide what you want to achieve. We will then work with you to make your succession plan as tax efficient as possible.

If you would like to discuss your options with us, or would just like to speak to one of our Agricultural and Horticultural Specialists you can call us on 01243 782 423 or head to our contact page and they will be in touch!

Horticultural and Agricultural Specialists - Chichester Accountants

To lease or buy your new agricultural and horticultural equipment?

by Leah McGarvey | 2 Nov, 2020 | Agriculture & Horticulture, Business

It is hard enough for you to run your business, without having to know the rules for tax and accounts for HP, leasing and buying equipment.

Our team understands that every financial decision you make is important, and where or how you spend your money matters.

Some points to consider before making these decisions are:

Will you be able to cover any maintenance costs that will incur should you buy equipment outright?
Does your business have a good credit rating?
Is your cash flow consistent enough to sustain monthly payments?

Our specialists can assist you in considering these points and can calculate the tax and VAT effect of each of the options, as getting it right can save you money.

We can also let you know how your accounts will look if you take out HP, if you lease and if you buy.

Lewis Brownlee is here to help you.

Change for farming and horticulture – How Lewis Brownlee can make this easier for you.

by Leah McGarvey | 26 Oct, 2020 | Agriculture & Horticulture, Business

The industry is constantly changing and farmers and horticulturalists have shown themselves to be adaptable and resilient in the face of this change. We can be your trusted partner in taking your business forward profitably.

Xero is a strong and flexible cloud-based tool to deal with your accounting. In addition, there are industry specific add-ons to help you with your business decisions.

These can track the income and costs of your individual crops by season and by field. This can aid decisions such as whether to renew the lease on a field. They will also record your livestock and other products, tracking their profitability.

They take your data from Xero, so nothing has to be entered twice.

Figures from Xero can be used to create long-range projections. The scenarios can then be changed to provide information for decisions such as “Should I consolidate my debt?”, “Should I buy the neighbouring farm?” and how diversification will really affect your business’s figures.

You can then readily report management information for the bank or other lender.

Budget and actual can be compared in real time, in as much detail as you want. The key is, if you can’t measure, you can’t manage.

Change is hard. Lewis Brownlee can help make it easier for you.

If you have any questions, or would just like to speak to one of our Agricultural and Horticultural Specialists you can call us on 01243 782 423 or head to our contact page and they will be in touch!

Agriculture and Horticulture and R&D

by Leah McGarvey | 4 Aug, 2020 | Agriculture & Horticulture, Business

Agriculture and Horticulture and R&D

Is your farming or horticultural company innovating to improve your business?

This could mean that you can claim research and development (R&D) tax relief… R&D is not only done by scientists and computer specialists.

Any innovation aimed at “making an advance in science or technology” can lead to tax relief. The project does not even have to work.

If your company pays corporation tax, you could get a reduction to your taxable profits of up to 230% of the R&D spend.

If your company is making losses at the moment and is small or medium sized, it may be possible to get up to one third of your R&D costs as a payable credit from HMRC.

If it is your first claim, it is possible to look at the previous 2 sets of accounts as well as the current ones.

R&D claims can be tricky and we can help you!

Our agricultural and horticultural team of Christine Deacon and Melanie Phillips would be happy to help you! You can call us on 01243 782 423 or head to our contact form and we’ll be in touch!

Agriculture, horticulture, tax and COVID-19

by Leah McGarvey | 29 Jun, 2020 | Agriculture & Horticulture, Business

Agriculture, horticulture, tax and COVID-19

Have you got the cashflow that you need ?

Most blogs will talk about the bank loans you can get to recover from Covid 19, but what other sources of money are there to help your cashflow?

First of all is tax reclaims on losses. If you are a company and have lost £100,000 this year, and you made £100,000 the previous year, potentially by carrying back your losses, we can get you a tax refund of £19,000. The figures for a sole trader or partnership may be even more dramatic. So if this could apply to you, we can get your accounts and tax computations prepared as soon as possible, so your tax refund claim can be made and the refund in your bank account.
Secondly for limited companies is Research and Development tax credits. Lots of our clients embrace innovation, so have the potential to claim R and D tax credits of up to a third of the relevant expenditure. To help our clients on this we are offering a free meeting to discuss the possibility of an R and D claim.
The third thing to look at is how much are your accounting systems costing you? We are still taking on clients with old fashioned accounting systems that not only cost too much in terms of licence fees, but also absorb way too much of your staff’s time. Our IT people would be happy to introduce you to how a modern system works for you.

Our agricultural and horticultural team of Christine Deacon and Melanie Phillips would be happy to help with any of the above, or if you are being forced down the bank loan route will support you with preparing a quality cashflow.

You can call us on 01243 782 423 or head to our contact form and we’ll be in touch!