Consider incorporating following Pre-Budget Report, says Old Mill
Farming businesses should consider incorporating in the next tax year, following changes announced in today’s Pre-Budget Report, says Old Mill Rural Services.
“The Chancellor’s Pre-Budget Report was somewhat surprising in its lack of revenue-raising increases, that many had been expecting to fill the government’s large deficit,” says Catherine Vickery, rural tax specialist at Old Mill. “However, there have been some changes that will impact on farming businesses, particularly the 1% rise in National Insurance contributions for both self-employed and employed workers from April 2011.”
Alistair Darling also announced a freezing of the Corporation Tax rate, confounding expectations of an increase. “These two measures will surely push more farmers into incorporating their businesses, to draw profits via dividends, which are not subject to National Insurance contributions,” says Mrs Vickery.
Other changes announced in the Pre-Budget Report included the well-publicised abolition of Furnished Holiday Let allowances, which will render holiday properties liable to Capital Gains Tax and Income Tax in the same way as other rental properties. “However, early indications are that some of the tax benefits accrued before 6 April 2010 will not be lost overnight, which will be a relief to holiday cottage owners.”
Mr Darling also froze the Inheritance Tax nil rate band at £325,000, rather than increasing it to the proposed £350,000. “If your assets exceed this amount then you should be considering how to minimise your potential Inheritance Tax liability,” says Mrs Vickery. “In all these cases it is a good idea to seek professional advice, to keep as much of your hard-earned cash where it belongs.”
Editor’s Notes
For more information contact:
Alan Stone, marketing manager – Tel: 01749 335007, or e-mail: alan.stone@oldmillgroup.co.uk
About Old Mill Rural Services
Old Mill accountants and financial advisers employ 190 staff in four West Country offices. The Rural Services teams are headed by Mike Butler (Yeovil), Ian Sharpe (Shepton Mallet), Andrew Vickery (Exeter) and Paul Neate (Devizes). Looking after over 1,200 farmers they are one of the leading specialist farm accountants, and are happy to help with any financial and tax-related enquiries from the media.