Agricultural Update and Key Budget Announcements

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· Okehampton · Plymouth · Seaton · Somerton · Tiverton · Torquay · Weston super Mare

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EU PRODUCTIVITY GRANTS
CLOSED TO ALL NEW APPLICATIONS!!!
• LEADER – 100% Successful applications - £109,796
• Countryside Productivity Grants (Robots) – Applications being
appraised by RPA - £620,693

GRANTS STILL AVAILABLE
• Natural England - Countryside Stewardship scheme under EU rules
• RPA –BPS
• Water Authorities – under local need
• Local Authorities

LAST CHANCE!!!
Small Countryside Productivity Scheme – Reopens early
2019

WHATS NEXT
The Environmental Land Management
Scheme
• Clean Air Strategy 2018.
“We will require and support farmers to make investments in the
farm infrastructure and equipment that will reduce emissions.”
“A future environmental land management system will fund
targeted action to protect habitats impacted by ammonia”
• National Air Pollution Control Programme – March 2019
• National Code of Good Agricultural Practice to Control
Ammonia Emissions

THANK
YOU
“The content of this presentation has been prepared as a guide to topics of current financial business interest. We strongly recommend you take
professional advice before making decisions on matters discussed within. We can accept no responsibility for any loss to any person acting, or
refraining from acting, as a result of this material.”

AGRICULTURAL UPDATE
• Look at Income in last 12 months
• – Government figures to March 2018 published 31st October
• Look at trends
• Current Issues
• Farm Level Key Actions

-£5,000
£15,000
£35,000
£55,000
£75,000
£95,000
£115,000
£135,000
£155,000
£175,000
Cereals General
Cropping
Dairy Lowland
Grazing
LFA Spec Poultry Mixed
FARM BUSINESS INCOME PER FARM
2012/13 2013/14 2014/15 2015/16 2016/17 2017/18
Source: DEFRA FARM BUSINESS INCOME2017/18

“The content of this presentation has been prepared as a guide to topics of current financial business interest. We strongly recommend you take
professional advice before making decisions on matters discussed within. We can accept no responsibility for any loss to any person acting, or
refraining from acting, as a result of this material.”
-£20,000 £0 £20,000 £40,000 £60,000 £80,000 £100,000 £120,000
Cereals
General Cropping
Dairy
Lowland Grazing
LFA
Spec Poultry
Mixed
BUSINESS INCOME GENERATION 2017/18
FBI BPS Diversified Agri Environment Agriculture

£0
£500
£1,000
£1,500
£2,000
£2,500
£3,000
£3,500
£4,000
£4,500
£5,000
Winter wheat Field Beans Potatoes Intensive
Dairy
Grass Dairy Replacements
/ Reared
Beef 22 - 24
month
Breeding
Sheeep
(Lowland)
Farm Gross Margins
2007/2008 Average 2018/19 Average
Source: HSBC Forward Planning

£0
£1,000
£2,000
£3,000
£4,000
£5,000
Winter wheat Field Beans Potatoes Intensive
Dairy
Grass Dairy Replacements
/ Reared
Beef 22 - 24
month
Breeding
Sheeep
(Lowland)
GROSS MARGIN PER HECTARE
2007/2008 Average 2018/19 Average
Source: HSBC Forward Planning

GOING FORWARD – WHAT ARE THE ISSUES
1) Subsidies – can they be relied on?
2) Commodity Markets – Brexit affect / world production / population
growth
3) Weather – stormy less predictable how to mitigate
4) Buyers – becoming more demanding
5) Public – food intolerances / animal welfare / dietary demands
6) Environment – major issues with farming seen as major
pollution contributor

INDIVIDUAL FARMS
• Know what they are good at and concentrate on income
generators
• Know what costs to tackle first for biggest gain
• Spend time working on what environment is needed to reduce
pollution risk and improve labour efficiency
• Work with the environment and use tillage and husbandry
techniques
• Based on natural actions

INDIVIDUAL FARMS
• Understand costs
- Variable costs below 50% turnover
- Management overheads below 30%
turnover
- Structural costs below 10% turnover
- Want to see profit at 10%+ of turnover
• Invest and know time needed to see return
• Use Government grants wisely to improve
efficiencies

29 October 2018
• Structures and Buildings Allowance (SBA)
• Changes to Entrepreneurs Relief on shareholdings
1 January 2019
• Annual Investment Allowance increase to £1 million for 2 years
April 2019
• Personal Allowance increases to £12,500
• Higher Rate Tax threshold increases to £50,000
• Capital Allowances special rate reduces from 8% to 6%
• Entrepreneurs Relief qualifying period increases from 1 year to 2 years
April 2020
• IR35 reform
• Employment Allowance restricted to employers with employers NI below £100,000
• Lettings Relief only available if shared occupation
• Private Residence final period exemption reduced from 18 months to 9 months
• Corporation Tax reduces from 19% to 17%
BUDGET

Structures and Buildings Allowance (SBA)
• 2% annual allowance on cost of qualifying structures or buildings
• Not available for contracts before 29 October 2018
• New commercial structures and buildings, including conversions
and renovations
• Limited to costs of construction (land costs, planning costs not
eligible)
• Can only claim when brought into use
• No AIA
• Dwelling houses will not qualify
BUDGET

Entrepreneurs Relief
• Available when selling a business as a sole trader or a partner
and you have owned the business for the qualifying period
• Available on shares in a personal company where the company
has traded and you have held at least 5% of share capital and
voting rights for the qualifying period
• From 29/10/18 shareholders must be entitled to at least 5% of
distributable profits and net assets of the company
• From April 2019 qualifying period increased to 2 years
• Problem with alphabet shares?
BUDGET

Capital Allowances
• 1 January 2019 – AIA increases from £200k to £1 million
• April 2019 – special writing down rate reduces from 8% to 6%
BUDGET

Annual Investment Allowance
• 31 March 2019 year end
• Maximum for year (200*9/12 + 1000*3/12) £400,000
• Maximum in 9m to 31/12/19 £200,000
• Maximum in 3m to 31/3/19 £400,000
BUDGET

Annual Investment Allowance
• 31 March 2021 year end
• Maximum for year (1000*9/12 + 200*3/12) £800,000
• Maximum in 9m to 31/12/20 £800,000
• Maximum in 3m to 31/3/21 £50,000
BUDGET

Capital Allowances
•Integral features & long life assets 8% becoming 6% from April 2019
•Plant and machinery 18% per annum
BUDGET

Capital Allowances – Integral Features
• Electrical system including a lighting system
• Cold water system
• Space or water heating system, powered system of
ventilation, air cooling or purification
• Lift, escalator or moving walkway
• External solar shading
BUDGET

Capital Allowances – Plant & Machinery
• Slurry storage systems
• Silage clamps
• Rainwater harvesting and filtration equipment
• Gutters and associated piping for carrying rain water
harvested for business uses
• Silos for temporary storage
BUDGET

Capital Allowances – Plant & Machinery
• Concrete pad surrounded by low-level barriers for
temporary storage of manure
• Storage tanks
• Milking parlour, drainage, equipment and cleaning
systems
• Moveable pens, crates, pig tents or pig arks
• Feed systems (whether or not automated)
• Slatted flooring areas (as internal parts of a slurry
system)
BUDGET

Employment Allowance
• Claimed by all employers to reduce National Insurance
bill by up to £3000
• From April 2020 only available to employers with a
National Insurance bill below £100,000
BUDGET

Lettings Relief and Principle Residence Relief
• Currently the last 18 months of ownership of your own
home are exempt from Capital Gains Tax irrespective of
how it is used
• There has been further relief of up to £40,000 (£80,000
for a couple) to cover gains where your own home has
been rented out
• From April 2020 the final exempt period reduces to 9
months and Lettings Relief will only be available where
there is shared occupation by the owner and tenant
BUDGET

Lettings Relief and Principle Residence Relief
• House bought 2000 for £150,000
• Sold 2020 for £300,000
• Rented from 2005 – 2010
• Empty for last 18m before sale
• Gain £150,000
• Gain relating to rental period (5/20*150k) 37,500
• Gain relating to last 18m (1.5/20*150k) 11,250
BUDGET

What hasn’t changed
• VAT threshold stays at £85,000
• Rent a Room relief remains
• Class 2 National Insurance unchanged
• Savings 0% rate remains at £5,000
• Pension relief unchanged
• Agricultural and Business Property Reliefs unchanged
• Making Tax Digital
BUDGET

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