Top farming tax advice from AC Mole

First published in Farmer

THE launch of the new County Gazette farming supplement is very timely as a change to the tax system which will affect many farmers is only a few weeks away.

The change is to the Annual Investment Allowance (AIA).

This currently stands at £100,000, and qualifying expenditure up to that amount is relieved for tax in the year an asset is acquired.

From April 6 (April 1 for companies) the AIA will fall to £25,000.

There are special rules for businesses with year ends other than April 5 (April 1 for companies).

Expenditure in excess of the AIA is relieved over a period of years.

If you are contemplating the purchase of a tractor, farm machinery or incurring certain expenditure on farm buildings, you need to act quickly and take expert advice as the timing of the transaction could significantly affect your tax bill – and your cash flow.

This change will be a blow to many farmers, significantly delaying tax relief on some capital expenditure.

The timing is especially unwelcome in view of the demise of Agricultural Buildings Allowance (ABA) last April.

What many farmers have not been told, however, is that even with the loss of ABAs there is still tax relief available for some expenditure on buildings.

This relief can be claimed partly (sometimes entirely) by way of the AIA and partly over a longer period through writing down allowances.

Allowances can be claimed on plant and machinery, and, importantly, on what are called “integral features”.

Integral features include, for example, electrical, lighting and cold water systems within a farm building, and space, water heating and ventilation systems.

Temporary huts which can be moved from one site to another may also qualify, as may chicken shacks, pig arks or poultry houses if they are not only moveable, but are actually moved.

If you are having a new agricultural building constructed it may pay to put your builder in touch with your accountant right at the start to ensure that all qualifying items are identified and itemised on the builder’s invoices.

It is more important than ever to take time to talk to your accountant in order to minimise your tax bill.

The earlier you do so the better.

Contact David on 01823-624450 or email davidperry@acmole.co.uk

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