When it comes to improving and modernising your farming operations, DEFRA grants offer vital financial support. These grants, provided by the Department for Environment, Food & Rural Affairs (DEFRA), aim to enhance productivity, innovation, and sustainability in the agricultural sector. Understanding what DEFRA grants are and how they can benefit your farm is crucial.

What Are DEFRA Grants?

DEFRA grants are financial aids provided to farmers and agricultural businesses in the UK to support various aspects of farming. These grants can cover a wide range of needs, from implementing new technologies to improving animal welfare. The goal is to boost productivity, ensure environmental sustainability, and promote animal health and welfare.

Types of DEFRA Grants

There are several types of DEFRA grants available to meet different farming needs:

• Grants for Automation and Robotics: These grants help farmers adopt advanced technologies to automate and streamline their operations, improving efficiency and reducing labour costs.
• Grants for Research and Development: Funding is available for developing new technologies or services that can benefit the farming industry. This can include innovative farming methods or sustainable practices.
• Grants for Equipment to Support Productivity and Slurry Management: These grants assist farmers in purchasing equipment that enhances productivity and manages slurry effectively, contributing to better farm hygiene and environmental protection.
• Grants to Support Tree Health: Financial aid is provided to maintain and improve the health of trees on farms, ensuring they remain robust and beneficial to the environment.
• Grants to Fund a Yearly Vet Visit: Regular veterinary visits are essential for maintaining animal health. DEFRA grants can cover the costs of these visits, ensuring livestock receive the necessary care.
• Grants to Support Animal Health and Welfare: These grants are designed to improve the overall health and welfare of farm animals, ensuring they live in good conditions and receive proper care.

This is not an exhaustive list of available grants. For a comprehensive list, please visit the government’s official DEFRA webpage.

Why Are DEFRA Grants Important?

DEFRA grants are essential for the agricultural sector as they provide much-needed financial support to implement improvements and innovations. They help farmers adopt sustainable practices, enhance productivity, and ensure the welfare of their animals. By utilising these grants, farmers can stay competitive and contribute positively to the environment.

How We Can Help

Navigating the various DEFRA grants and understanding eligibility criteria can be challenging. As experts in the field, we can provide you with the guidance and support needed to successfully apply for these grants. We offer personalised advice to ensure you make the most of the financial opportunities available, helping you improve your farming operations efficiently.

If you need assistance with DEFRA grants or have any questions about your eligibility, please do not hesitate to contact us. We are here to help you maximise the benefits of these grants and enhance your farming business.

☎️ Midhurst: 01730 817 243 | ☎️ Chichester: 01243 782 423 | ☎️ Whiteley: 01489 287 782

If you are looking to start up your own vineyard and sell wine there are a few things that you should be thinking about with regards to wine duty. So, let’s not beat around the bush! Vineyard duties! They might not sound exciting but trust us, you will want to know about them up front!

If you are producing wine to sell then you must be licensed with HMRC for duty purposes. So too, you must also hold a wine producer’s license. Wine becomes liable to duty when it is made and the strength exceeds 1.2% alcohol by volume.

Duty is charged on the number of liters of pure alcohol within the wine and so is determined by alcohol strength. It becomes payable when the wine is released from or consumed in licensed premises or excise warehouses.

Below is a table that shows the duty rates:

Duty needs to be reported and paid on a monthly basis to HMRC in relation to the duty due.

HMRC Visits

HMRC will visit your premises occasionally to make sure that duty is being correctly assessed and accounted for. This will be done by auditing your commercial, accounting and management control systems. Also, physical checks will be made on production, stock and movements of wine in duty suspension.

You must keep records showing materials used. Particularly, you will need to record details of processes and operations, quantity and strength of wine, samples, domestic consumption, imports, exports, receipts and any stock takes.

Small Producer Relief

It is possible to claim Small Producer Relief as long as your production in a year is below 4,500 hectolitres. You will need to apply to HMRC for this and supply them with an estimate of your upcoming years production.

You can claim a refund of duty on wine returned to the premises provided it:

• was produced by you
• has become spoilt or otherwise unfit for use
• has not undergone any further process or dilution since leaving your premises

The following are excluded:

• adulterated wine (containing additions which we have not approved)
• wine for which no satisfactory audit trail is available

If any wine becomes spoilt more than 3 years after the duty was paid, you cannot claim relief.

Vineyard Duties – the Low down

The rules and regulations surrounding vineyard duties can be complex and often daunting. It is an undeniably complex area. Consequently, if you are in any doubt, it is crucial to seek advice from a professional. Experts in the field (like us!) know the legislation inside out and are best placed to ensure you remain compliant.  So, if you are at all unsure on any of the above or the HMRC guidance, please do give us call. With three offices across the South Coast, we are always happy to see how we can help!

Additionally, as we offer a free introductory meeting, there really is nothing to lose and potentially vineyard duty expertise to gain!

☎️ Midhurst: 01730 817 243 | ☎️ Chichester: 01243 782 423 | ☎️ Whiteley: 01489 287 782

Because growing trees may take several generations to mature and would otherwise be taxed on each successive death, there is a specific relief for transfers of woodlands on death, under IHTA84/S125. It is available, subject to certain conditions being satisfied, where any part of the value of a person’s estate immediately before death is attributable to the value of land on which trees or underwood is growing.

There are three types of woodland for inheritance tax purposes and they are as follows:

* Commercial Woodland

This includes woodlands such as orchards, nurseries or other areas of wood or forest used to generate business profits. This sort of land is usually eligible for 100% BPR (subject to conditions). Woodlands relief can be claimed but where BPR is allowed in full then this will be unnecessary.

* Woodland ancillary to agriculture

This type of woodland is eligible for APR. Some examples include shelter belts which are a line of trees or shrubs planted to protect a field of crops from bad weather. If this kind of land is designated by HMRC as agricultural property then the woodland is excluded from woodlands relief.

* Other non-commercial or non-agricultural woodland.

This is areas such as woodland held as part of one’s private residence or held as an investment. This type of woodland will qualify for woodlands relief.

Where the relief is available, the person liable for the tax may elect to exclude the value of the trees or underwood from the value transferred by the chargeable transfer on the deceased’s death and instead pay tax when the trees are disposed of, for example, by sale or gift, other than to the disposer’s spouse or civil partner. No relief is given for the land itself.

If there is a disposal, tax is charged on the next death in the usual way, unless another election is made to defer the tax.

Conditions for Relief

An election must be made by the Executors of the deceased within 2 years of the date of death and the land must be situated in the UK or in an EEA state.

The deceased must have either:

1. Owned the land for 5 years immediately prior to their death, or
2. Acquired the land by way of gift or inheritance.

Subsequent Disposal

A subsequent disposal of the woodlands will trigger a charge to IHT.

This means that the sale of the woodland would be charged to IHT on the vendor and on a gift of the woodland the IHT is charged on the donor. There is of course and exception for a gift to a spouse or civil partner.

For further information, the official government website is always a good first port of call! However, speaking to a seasoned professional is also a good option. We can help you there! As expert accountants specialising in Agriculture and Horticultural Accounting, we are always more than happy to see how we can help!

So, please do call us today at one of our three office. And, together, let’s see how we can partner in your Woodlands Relief success!

☎️ Midhurst: 01730 817 243 | ☎️ Chichester: 01243 782 423 | ☎️ Whiteley: 01489 287 782

Tax treatment of commercial woodlands can be a difficult area to navigate. However, we thought briefly summarising a few points of interest might help!

Let’s take a look…

Income Tax and Corporation Tax:

Commercial woodlands are not taxable as long as the activities are conducted in a view to making profits. With this being the case the following applies:

• income from the sale of timber from the ownership of commercial woodlands is exempt from both Income Tax and Corporation Tax – the exemption only applies if the timber cut or felled is not altered or transformed prior to sale
• profits arising from the occupation of commercial woodlands are not chargeable
• capital allowances cannot be claimed on capital expenditure incurred on plant or machinery connected with commercial woodlands

Please note that if the woodland is connected with or attached to an existing farming trade, special consideration will have to be given as to the tax status of the operation.

Relief is not available for:

• losses suffered
• expenditure incurred on the preliminary clearance of woodland or other preparation of land for forestry purposes

Capital Gains Tax

Profits from the sale of trees in commercial woodlands are exempt from Capital Gains Tax. This exemption applies whether the trees are standing or have been felled.

A growing timber crop (but not the land it grows on) is exempt from Capital Gains Tax, where managed as a commercial investment.

Inheritance Tax

A commercial woodland that forms part of someone’s estate is unlikely to qualify for Agricultural Relief. However Business Relief may be available where the following conditions are met:

• the woodlands are being actively used in a business, which is managed with a view to a profit.
• the rules excluding investment businesses from obtaining business relief do not apply.
• the woodlands need to have been owned and occupied by the transferor for at least 2 years before the transfer.

If the woodlands qualify for 100% Business Relief, Inheritance Tax will not be chargeable in relation to either the land or the trees.

If neither Agricultural Relief or Business Relief apply but the trees are growing then Woodlands Relief may be available.

For further information, please do refer to the government’s official webpage or feel free to give us a call. As Agricultural and Horticultural Accounting specialists, we are always poised to help!

☎️ Midhurst: 01730 817 243 | ☎️ Chichester: 01243 782 423 | ☎️ Whiteley: 01489 287 782

The herd basis is a special method of working out profits or losses which may be used by farmers who keep production livestock. If you use the herd basis you will want to keep records. This is so that you can identify the figures to be used when applying the special rules.

As a general rule, farm animals are dealt with as trading stock within the annual accounts. However, some animals are used purely to obtain products or in order to breed. In such cases, the herd can be regarded as being a capital asset of a farming business. Should a farmer wish for their livestock to be regarded as being capital assets, they can elect for the Herd Basis to apply.

Some eligible herds include:

• Dairy herd
• Sucker beef herd
• Breeding flock
• Laying hens
• Sheep kept for fleece production
• Horses kept for breeding

However, there are some exclusions, where the herd basis cannot be used including:

• Working animals
• Horses kept for racing
• Flying flocks (kept for resale)
• Immature animals
• Animals kept only for fattening and slaughter

It is important to note the stock within a qualifying herd does not necessarily have to be of the same breed. However, they must all be of the same species.

The treatment for the purpose of computing farming profits of the herd or herds covered by the election is governed by the special rules. Very briefly they are:

• the initial cost of the herd is not an allowable deduction. Nor is the cost of any subsequent increase in herd size.
• the net cost of replacing animals in the herd (but not any element of improvement) is an allowable deduction
• where the odd animal, or just a few animals (amounting to less than 20% of the herd), are sold from the herd and not replaced, the resulting profit or loss is taken into account in arriving at the farming profits
• where the whole herd, or a substantial part (20% or more) of the herd, is sold and not replaced, the resulting profit or loss is not taken into account

It is important to remember the ongoing costs of herd maintenance is fully tax deductible, although the initial cost of the herd is not. The operation of the production herd under the herd basis is more complex, particularly around adding and removing animals from and replacing animals in the herd.

Time limits for election

A claim for the herd basis election must be made in writing to HMRC within two years of the end of the accounting period for a company and by 31 January falling two years after the end of the tax year in which the herd is first kept. An additional year is allowed if the year in which the herd is first kept is also the year in which the farming activities first began. So, a new entrant into farming for example!

This election is irrevocable so please do seek advice before making such an election. The herd basis election is not available if you have had flocks or herd for many years unless there is a partnership change. If the herd basis is not already in place, and you think your business could benefit from it, please take advice.

Managing livestock can sometimes involve the difficult and stressful prospect of compulsory slaughter. Understanding how compensation for compulsory slaughter is treated and the special rules that apply can help farmers navigate these challenges more effectively. So, here’s a quick overview of the treatment of compensation and the specific rules available to farmers when dealing with compulsory slaughter.

Treatment of Compensation

Compensation for compulsory slaughter is normally treated as sale proceeds whether or not the animal concerned is part of a production herd accounted for on the herd basis.

Special Rules for Non-Herd Basis Animals

Where the animals slaughtered are not on the herd basis and could not be (even with the fresh opportunity to elect for herd basis following compulsory slaughter of more than 20% of a herd), there are special rules which allow you to remove the profit arising from the year of slaughter by instead bring it in 3 equal instalments over the next 3 years.

Conclusion

Compulsory slaughter can have significant financial implications for farmers. However, by understanding the treatment of compensation and the special rules for non-herd basis animals, farmers can better manage the impact on their finances. As specialists in agricultural accounting, we are here to help you navigate these complexities. So, please do contact us today if you would like to find out more. We are always happy to see how we can help!