New Chairman takes up role at Fermanagh Grassland Club

He was elected to the top position at the annual meeting of the club, held in the Killyhevlin Hotel earlier in December. The new Vice-Chairman is Robin Clements, a dairy farmer from Trillick.

The outgoing Secretary, William Johnston, and outgoing Treasurer, Philip Clarke, were all re-elected. The new committee is Trevor Dunn, John Egerton, James Murphy, Alan Warnock, David Foster and Alan Burleigh.

The guest speaker at the annual meeting was Seamus McCaffrey, from Irvinestown, who is a well-known accountant who specialises in taxation, from S. P. McCaffrey and Co., Omagh. He has just stepped down from his position of Chairman of AgriSearch.

He gave a most informative and timely presentation to the club, outlining a range of topics for farmers to consider such as expenditure on machinery, buildings and repairs; business structure, succession planning; inheritance tax, capital gains tax, discussion points and current news with tax.

On expenditure on buildings and repairs, Seamus explained how spending on the farmhouse was eligible for reducing tax.

Up to 70 per cent of expenditure depending on the part of the farmhouse where this occurred was able to be claimed for VAT, and in relation to income tax, one-third of expenditure excluding VAT was allowable.

All repairs were allowable, although it was the onus of the taxpayer to produce evidence – such as wording on the invoice and photographs of areas where the expenditure took place – a good idea before improvements were carried out.

In terms of plant and machinery, either new or secondhand, up to 100 per cent of expenditure on £1m spend per year up to March 31, 2023, was allowable against tax in the first year, with a reducing balance of 18 per cent per year.

Regarding agricultural buildings such as a new beef house, Seamus said a slurry tank was fully allowance for tax purposes, but generally a house above ground wasn’t, except where the steel posts were bolted onto the tank or floor, and concrete panels were used for walls instead of permanent shuttered concrete walls.

In these circumstances, the structure is moveable. There was also no issue with slats or internal fittings such as dividing gates and feeding gates.

Discussing business structure and tax and class 4 NIC, Seamus explained that sole traders or partners in partnerships paid tax of 30.25 per cent on up to £50,270 taxable income per person.

From £50,271 to £150,000 taxable income per person, tax of 43.25 per cent was liable, and after £150,000 taxable income, 48.25 per cent was liable for tax.

For farmers defined as companies, limited or unlimited, companies pays Corporation Tax on profits retained in the company of 19 per cent in the accounting periods up to March 31, 2023, on profits up to £50,000, with higher percentages on higher profits.

Company structures facilitates tax credit, student finance and succession planning. He said those involved in farming needed to consider the best business structure, sole trader, partnership or company depending on the rate of tax paid annually, drawings required, succession planning, research and development, tax credits/universal credit and student finance.

Succession planning was an important issue. He explained it was not about retirement, but the process of ensuring the continuity of the farm business beyond its current management and constantly evolved.

“It enables the compounding of wealth from generation to generation while maintaining family unity, individual growth and a sense of contribution. It is key to achieving sustainability and is about the farmer taking responsibility for the future,” explained Seamus.

He suggested techniques for succession planning include open discussion with family members, having two names on the business bank accounts, herd number and IACS, and to make a will, which should be reviewed every three years.

He also said consideration should be given to appointing two executors with knowledge of farming and younger than themselves, organising a Power of Attorney, pension planning and taking legal and tax advice to assist in implementing the succession plan.

During his presentation, Seamus also touched on Inheritance Tax planning which has an exemption of £325,000 per spouse.

Relief includes Agricultural Property Relief at full 100 per cent applying to the agricultural value of land in the UK, and used for the purpose of farming.

The claimant must prove they are involved in the management and operation of the farm.

Capital Gains Tax is on the increase in the value of land and buildings from acquisition to sale or gift. There is no CGT on death, but individual rates vary from 10 to 28 per cent.

Seamus said farmers should have discussions with their accountants, firstly on the accounting system used for rely to HMRC, banks and tax planning.

He said that a trading loss in the year that a son/daughter becomes head of holding can be carried back for three years and set-off against son/daughter’s employment, if employed, resulting in a tax refund.

He also issued advice for those who bought milk quota as they can be recorded as establishing a loss.

He concluded by giving the current position on tax such as tax payer profiling, the fact that sole traders/partnerships are changing to March 31/April 5 accounting date from April, 2024, with the transitional year of 2023-2024.

Making Tax Digital is now already a requirement for many businesses, where VAT must be declared for businesses with turnover more than £85,000 since April, 2019, and for turnovers below £50,000 since April this year.

From April, 2024, new return periods come into force for income tax for sole traders and landlords, and from April, 2025, for partnerships.

For VAT periods starting after January 1, 2023, interest and penalties will apply to all late VAT returns.

Seamus encouraged farm businesses to have up to date record keeping, predict cash-flow difficulties early, and have an estimate of tax liability before the end of the financial year, take part in benchmarking with the Department, and source advice from www.hmrc.gov.uk/courses/syob/farm/index.htm.