Managing farm finances after flooding: How to make the most of recovery payments
By Andrew Heskin, Partner and ARA specialist
Flooding can have devastating effects on farmland, disrupting operations and damaging soil, crops, and infrastructure.
While the Government’s recent £57 million in recovery payments provides vital support, effectively managing these funds will get your farm back on track and build resilience for the future.
Prioritise essential recovery tasks
Flood recovery payments are designed to support land recovery activities such as soil remediation, recultivation, and debris removal.
Start by assessing the damage to your farm and prioritising tasks that are most critical to restoring productivity.
Create a clear recovery plan that focuses on cost-effective solutions, such as repairing drainage systems or improving soil health.
Keep detailed financial records
Accurate record-keeping is vital to track how you allocate recovery funds.
Not only does this help with budgeting, but it is also important for tax reporting.
Recovery payments may have specific reporting requirements, so maintaining clear documentation will make compliance easier.
Our team can help you create a system for recording expenses, invoices, and receipts related to recovery activities.
This ensures you have everything you need to prepare for your next financial review or tax return.
Understand the tax implications
Recovery payments can have tax implications, depending on how they are classified and used.
While they may not be considered taxable income in all cases, using the funds for capital improvements could impact your tax allowances.
Review your insurance and financial reserves
Flooding highlights the importance of having adequate insurance coverage and financial reserves to manage unexpected events.
Use this opportunity to review your current policies and savings plans to ensure they align with the risks your farm faces.
Consider whether your insurance covers business interruption or damage caused by future extreme weather events.
If not, it might be time to explore more comprehensive options.
Plan for future resilience
While recovery payments address immediate needs, they can also be used to build long-term resilience against extreme weather.
For instance, improving drainage systems, investing in flood-resistant infrastructure, or adopting sustainable farming practices can reduce the impact of future floods.
Government funding often comes in the form of promoting sustainability goals, so take advantage of grants or incentives that encourage environmentally friendly practices.
Flood recovery payments are a lifeline for many farmers, but careful financial management is crucial to maximise their impact.
If you would like help managing recovery funds or planning for a more resilient future, our agricultural specialists are here to support you.
Contact us today to learn more about how we can assist your farm.