1 February 2017
So, here we are at the end of another tax return cycle. Your tax return should now be filed, and if you had some tax to pay you should have now made the payment - hopefully not too much tax to pay but enough to show that your business is still generating profits.
Are you breathing a big sigh of relief as another deadline has been met or have you already turned your attention to this year’s tax return, and planning your tax affairs for the year ended 5 April 2017 and beyond?
There are still two months to go until the end of the tax year and, with most farming businesses having a 31 March year end, plenty of time to consider tax planning opportunities. So now is the time to sit down in front of the most up-to-date set of management accounts and work out what can be done to mitigate the forthcoming tax liabilities. Cash flow may be tight this year so taking time to plan ahead will be beneficial.
This year’s tax planning may arguably not be about buying a new piece of kit and claiming the maximum Annual Investment Allowance (AIA) available (as nice as that maybe!) but may be more about productivity gains, efficiency and cost control. With the uncertainty of life after Brexit, reviewing the business and its cost structure now is a good use of your time so do not put it off - put some quality time aside and get to it!
For businesses that have diversified into other activities, one of the issues that needs careful consideration is that new business rates that will come into effect from the 1 April 2017. Businesses with properties that have a rateable value above £12,000 must pay rates. The changes to business rates are predicted to disproportionally affect rural based businesses which typically occupy more space, due to the nature of the business, and, as the new rates are calculated in part by the rentable value of property, the rates will increase.
So if you are looking for somewhere to start your review of costs, reviewing your exposure to the change in the business rates is a good place to start. Check the basis of the new valuation before 1 April as, after this date, there is a formal appeals procedure, which is likely to be a lengthy process that I am sure you could arguably do without. But do not stop there. It is likely that a lot of other costs will increase this year so reviewing your expenditure to ensure you are getting the best deal, and that the cost or the level of expenditure is necessary, will enable you to reconsider the value gained.
I know sitting down in the office looking at paperwork is not as enjoyable as actually farming, but hopefully you will find it rewarding in other ways.
For further information on any issues raised in this blog, or to discuss your specific circumstances in relation to business reviews, please contact Tim Maris, author of this blog and head of our national rural and agriculture group, or your nearest rural expert here. Alternatively, to read more on our services to the rural sector please click here or to read more rural blog posts please click here.
