Controlling what you can
A bright future for any farm business starts with the basics and getting them right. Focus on what you can control as opposed to allowing yourself to be driven by the things you can’t.
Let technology make life easier
In business, it is best to focus on what you are good at, the majority of my clients are best when out and about making decisions to get the most from their farm, not doing paperwork! Why should they focus on paperwork when there is access to technology that frees you up from the office? This technology can provide access to real time information about farm finances, enabling faster and better-informed decision making. Now could be the time to make the move to an online accounting package in order to facilitate this.
The government’s Making Tax Digital regulation is just under a year away, which means by April 2019, all VAT registered businesses will have to meet their VAT obligations for filing and payment online.
Invest time now
While it was welcome news recently from the government that farm subsidies as we know them will continue until 2024, it is safe to assume that they will reduce after this date. It is important to use this opportunity to prepare your business now for this reduction in income in the near future.
If you are looking to invest in newer, greener technologies, access to real time information will help you with your decision making and when to purchase. There is potential for 100% first year allowances against profits, so knowing if and when your business will make a profit is vital to recoup the benefit of the purchase. With this in mind the timing of purchases should be carefully considered around the 5 April cut off. The Annual Investment Allowance cap is currently £200,000 so it could allow for a sizeable investment into your business.
Agricultural Property Relief provides the farming industry with 100% inheritance tax relief on non-trading activities, giving the ability to directly pass down wealth to the next generation. This is an area that could be potentially at risk from government attention, meaning that there is an incentive to consider passing assets to the next generation earlier. If you do decide to do this, consideration must be given to retirement provisions. Historically the farm has been used to fund retirement, with farmers traditionally not making pension provisions, but increasingly we are seeing more ‘middle aged’ farmers investing in pensions and there is the benefit of reducing the rate at which you pay income tax. There is time to act now before further pensions benefits are eroded.
What you can’t (yet) control…
Post Brexit farming
The public’s perception of farming is changing and there is now an opportunity for farm businesses to get a strong message out about what is happening locally on their farms, and what benefits they bring to the food chain and the local environment. Recent campaigns such as eating vegan may cause greater harm to the farm industry, but they do capture the public’s well meaning attention. And once farm benefits cease in the current form in 2024, farms will be competing for a greater slice of the public purse alongside the NHS, education etc. There will be a greater level of information, misinformation and scrutiny on the sector, so think now to help justify a future share of finances.
Chemical input bans
A glyphosate ban will be a massive change to current UK farming practices. There is currently little research into the alternatives. Perhaps mowing or ploughing – both are more labour intensive than spraying and will increase costs.
With subsidy being phased out and incentives likely to be offered to make farms more environmentally friendly, perhaps it won’t be long before the whole carbon footprint of a farm is looked at? However, looking at yields vs. going organic, it might well be more profitable to farm without the incentives and to maintain farm practices as they are.
Seasonal labour supply
Growers are already affected by a shortage but increasingly this is affecting more areas of the food production chain. Access to seasonal labour will continue to change, but it should still be possible to bring in full time staff.
Something none of us can control but we know we are seeing more extremes of the weather. Regardless of the weather, farmers always get on and do the job, but it helps if you prepare and fix the roof if you know it is going to rain.
We periodically send out complimentary newsletters, click here to receive yours.
Subscribe to our newsletters
Our complimentary newsletters and event invitations are designed to provide you with regular updates, insight and guidance.
You can unsubscribe from our email communications at any time by emailing firstname.lastname@example.org or by clicking the 'unsubscribe' link found on all our email newsletters and event invitations.