7 top tips for farm business in 2022


This time of year is traditionally a time for reviewing what has happened in the previous 12 months and plan for the New Year. This time last year we all hoped that Covid would be behind us by now, but unfortunately that is not the case, meanwhile farming is in the midst of major changes to support schemes as well as playing a major part in combatting climate change.

Here are our top tips for farming businesses for 2022:

  1. Take advice on the new grant schemes. Information regarding the schemes being introduced to replace the Basic Payment Scheme (BPS) in England is slow to be released. It is certain that almost all farmers will be worse off by 2027 when BPS ends, but income from the new schemes will ease the pain.
  2. Tax relief on capital expenditure. Many farmers leave capital expenditure until late in their financial year when they have a good idea of their likely profit. At present, the delivery date for new machinery is likely to be many months in the future, so decisions will have to be made sooner. The date for most purchases to qualify for Capital Allowances is the date of delivery, but for assets on hire purchase, there is an additional rule that the asset must be in use by the end of the accounting year.
  3. Are your Wills and Partnership Agreement up to dateChanging family circumstances and property values may require changes to be made every few years. Do not assume that all your assets qualify for 100% Agricultural Property Relief – residential properties not occupied by working farmers, and land/buildings with development potential are examples of assets that could be subject to Inheritance Tax.
  4. If you are contemplating ceasing farming or scaling back activities in the next couple of years, consider whether the English lump-sum retirement scheme is appropriate for you. Final details of the scheme have now been announced with applications having to be made by 30th September 2022.
  5. If you operate a contracting business, consider whether changes to the rules for red diesel use from April 2022 will affect you. These will particularly impact contractors who undertake non-agricultural services such as groundworks on a construction site.
  6. Do not ignore all the talk about carbon net zero. Many businesses in the food chain are now asking their farm suppliers about their carbon footprint. These businesses will have a target of reaching net zero by 2030 or 2040, and will encourage suppliers to have policies in place to do the same.
  7. Ensure VAT Returns are submitted on time. The vast majority of farmers are entitled to VAT repayments, so submitting returns promptly helps cashflow. For smaller businesses that have little VAT to reclaim at certain times of the year, the temptation may be to submit several returns at the same time. From January 2023 each late return incurs a penalty point, which may result in a future penalty of £200. A business submitting quarterly VAT returns is penalised when it reaches four points, and a business making monthly returns when it reaches five points.

Planning ahead in 2022 will help combat some of the impact felt by the changes to come and while this will be difficult in some cases as we wait for more information on the new support schemes and the lump sum retirement scheme, planning around the elements of the business you are able to foresee or control to some degree can never be a bad thing.

Please get in touch to speak to our agriculture specialists about the challenges your farm business is facing.

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