11 September 2018
*Update – on 12 September the Government announced further details on the future of the Basic Payment Scheme (BPS). Read our blog here.
With our exit date from the European Union of 29 March 2019 fast approaching, it is very much uncertain whether the UK will enter into a deal with Europe, meaning a no deal situation could be reality. One thing that is for certain is the import and export landscape will change, and the Government has pledged its support for the Basic Payment Scheme until the end of this parliament and potentially until 2024.
Turning a farming profit is increasingly challenging, and being subject to so much uncertainty means that now is clearly the time to think harder about alternative and supplementary income streams, and what actions you may need to take to mitigate against any future loss of income.
You may have already diversified in some fashion by letting out properties, offering storage space or keeping honey bees, with the related income and expenditure combined with the farm in the annual accounts. With our in depth farming knowledge we can work with you to identify the true farming performance and related need to supplement this by seeking further new income streams.
On the theme of farming performance and from a tax angle, it is paramount that expenses are allocated to the correct income streams, as this may have implications in calculating the right amount of tax due and in particular restrict a sideways loss relief claim, should the six-year hobby farming rules be breached. This may occur if, for example, repair expenditure is not correctly allocated against rental income and instead has been included as a farm repair.
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