Tag Archives: farming

Countryside Productivity Small Grant Scheme

The deadline is almost upon us to claim from the Countryside Productivity Small Grant Scheme. Applications need to be submitted before Midday on 14th March 2018.

  • Who can claim? – Farmers in England
  • What’s it for? – Purchase of smaller machinery and equipment which has been identified as helping achieve improvements in either: animal welfare, resource efficiency or nutrient management.
  • How much can I claim? – Grants are from £3,000 to £12,000 and are up to 40% of the total costs.

For further information and a full list of eligible items please see the Small Grant Handbook on the Gov.uk website.

Farmers Averaging Relief: What’s Your Average?

Wouldn’t it be nice if you could even out the ups and downs of your business profits? For farmers and market gardeners, there is the opportunity to do just that using the Farmers Averaging relief.

Instead of paying tax and national insurance on the actual taxable profit for two consecutive years, you can choose to take the average profit and then pay tax on this averaged profit figure for both years.

This relief is available for sole traders and partnerships only, and if you are in a partnership you can choose to average your share of the profit without your partners needing to average as well. You cannot claim if you commenced or ceased trading in either of the two years.

Averaging is particularly effective if one years profit would take you into the higher rate band whereas an average of the two years profits would keep you in the basic rate band for both years. Even if both years profits are in the basic rate band already, by reducing the second years profits through averaging, you will gain from a cash flow perspective by reducing the payments on account due for the following year. You can also average if one of the years has resulted in a taxable loss rather than a profit. In these cases, you treat the loss-making year as a NIL profit and therefore the averaged amount is half of the profit arising in the profit-making year.

To qualify, your profits must differ by an amount equal to 30% of the higher profit. There are also limited reliefs available if the difference is between 25% and 30%.

The adjustment is made on the second years tax return and any additional tax that becomes due for the first year (because the averaged value is higher than the original first years profit) is entered on the later tax return i.e. you do not have to amend the first return. Also, it’s worth bearing in mind that you cannot average for tax credits purposes. The income figure for your tax credits return must be the actual (un-averaged) profit.

For more information, please contact Lydia Williams on 01872 271655 or lydia.williams@kelsallsteele.co.uk