Farmers advised to proceed with caution when it comes to diversification
27th November 2017
With farm diversification on the increase, HB&O is advising farmers to seek specialist tax advice before implementing changes which could affect existing tax reliefs.
At a recent seminar held in partnership with HB&O, HSBC Bank and estate agent, Sheldon Bosley Knight, attendees heard from finance, tax, VAT and land management specialists, as well as gaining an insight into a successful solar panel diversification scheme.
Neil Allcroft, Tax Manager at HB&O, said: “Diversification is playing a growing role in the future of farms across the UK and is an important contributor to overall income. However, due to the complex set of reliefs in place for farms, it’s essential that farmers understand the wider implications of any changes, including how diversifying activities may affect any future exposure to capital taxes.
Statistics from the 2015/16 Farm Business Survey show diversification contributing £580m in income across the year, compared with £530m in the previous year. The potential benefits can be considerable. However, without careful planning, some changes could lead to immediate VAT implications and unintended future taxes by virtue of lost business reliefs.
Neil continued: “Farms will always have to pay tax, whatever their source of income, but how and when that tax is paid can directly impact cash flow, as well as succession planning. Seeking specialist advice at an early stage puts farmers in a strong position to make informed decisions about future diversification.”
For farm diversification tax and advice, contact Neil Allcroft or Jessica Mason on 01926 422292