A guide to tax reliefs available for farmers and landowners
By Heather Bright, Partner and ARA specialist
Working out tax reliefs can be a daunting task for farmers and landowners. Fortunately, there are several tax reliefs available that can significantly benefit your agricultural business
Income tax reliefs
Trading allowance
The trading allowance is an advantage for small-scale farmers, allowing you to earn up to £1,000 tax-free from trading and casual income annually.
Farmers’ averaging
Farmers have the option to average their profits over two or five years, helping to lessen the impact of fluctuating incomes and potentially reducing the income tax payable.
Corporation Tax reliefs
Research and Development (R&D) tax credits
If your farming business is involved in innovative projects, you might be eligible for R&D tax credits, which can significantly reduce your Corporation Tax bill.
VAT reliefs
VAT flat rate scheme for farmers
This scheme allows farmers to apply a flat rate addition to the sales of goods, helping to simplify VAT accounting processes.
VAT refunds on capital goods
Farmers can potentially claim VAT refunds on capital goods, such as machinery and buildings, which can result in substantial savings.
Capital Gains Tax (CGT) reliefs
Business Asset Disposal Relief
When selling part of your business, you might be eligible for Business Asset Disposal Relief, reducing the CGT rate to 10 per cent on qualifying assets.
Hold-over relief
This relief allows you to defer the CGT when gifting business assets or selling them below market value, helping in succession planning.
Inheritance tax (IHT) reliefs
Agricultural Property Relief (APR)
APR can significantly reduce or even eliminate the IHT on transfers of agricultural property, both during your lifetime and as part of your will.
Business Property Relief (BPR)
BPR can offer up to 100 per cent relief on business assets, including land and buildings used in a farming business, from IHT.
Understanding and utilising the available tax reliefs can play a pivotal role in the financial planning of farmers and landowners.
If you would like more information about tax reliefs and what you can claim for, please do not hesitate to contact us today.