“In the UK, employment taxes – that is income tax and national insurance withheld via the PAYE system – account for the biggest contribution of revenue to the Exchequer, so it is no wonder that considerable HMRC resource is devoted to ensuring that employers are compliant.

“HMRC’s investigative powers have been increasing year on year while the PAYE system has become more and more complicated.  Higher penalties are being imposed on employers in situations where it feels as though they have simply made “innocent” mistakes, whilst trying to comply with sometimes unfathomable complexity.

“For example, in the event that HMRC discover a “careless error”, a penalty of up to 30% of the tax can now be levied, with very limited scope for mitigation.

“There are also some unwelcome developments with the automated default surcharge for late payments (or underpayments) of PAYE for larger employers. HMRC no longer notify taxpayers “in year” that they are in default – something that may not always be obvious – making it more difficult to address and rectify the situation before penalties are incurred and then imposed, after the year end.

“The sheer complexity of regulation relating to expenses and benefits, ex-gratia payments, stock options, pension funding and salary sacrifice arrangements etc, make the prospects of successful compliance ever more remote, even where an employer has tried their best to be fully compliant.

“It is as though deliberate traps have been set for the unwary, and the imposition of increased and related penalties is seen as a legitimate means of raising additional revenue in its own right. This all adds up to an increasingly challenging game of cat and mouse.

“Employers therefore need to keep a wary eye on annual compliance in order to avoid the new and harsher penalty regime.

“But this of course, is a lot easier said than done because not all employers have the resource and knowledge to ensure compliance, and getting in external advisers can appear to be expensive and an unwelcome diversion of resource away from the main operation of the business. Approaching HMRC for help seems to be counter intuitive (heard the one about turkeys voting for Christmas?)

“Yes, everyone should pay the correct amount of tax, but the reality is that increased complexity makes this a harder and harder task for employers, and one that is arguably being exploited by the powers that be.”

Catherine Vickery, rural tax specialist at accountant Old Mill, said she was surprised that taxes were not hiked more sharply. “There were even some extra giveaways, which was amazing.” However, Mr Osborne did announce drastic changes to Capital Allowances, Capital Gains Tax, Income Tax and VAT, all of which would affect rural businesses.

“One of the key changes is the reduction in the Annual Investment Allowance, from £100,000 to £25,000 from April 2012. The writing down allowance for capital expenditure over that level will also be reduced, from 20% a year to 18%.” Although businesses would still receive the same level of tax relief, it would be spread over a longer period of time. “If you do have major expenditure coming up, make the most of your £100,000 annual allowance in each of the two tax years before this change comes into force.”

From midnight yesterday (22 June), Capital Gains Tax (CGT) rates increased to 28% for higher rate taxpayers – considerably lower than the 40-50% rate many expected. Lower rate taxpayers would retain the existing 18% rate, with gains over and above the higher rate income tax threshold of £43,875 levied at the new 28% rate.

“Anyone selling or gifting assets could face higher CGT rates – but those selling an entire business will benefit from the higher band for Entrepreneurs’ Relief,” said Mrs Vickery. The threshold increased from £2m to £5m, under which gains would be taxed at 10%.

Those renting furnished holiday lets were pleased to hear of plans to reinstate tax reliefs like Capital Allowances on furnishings, offsetting losses against other income, and Entrepreneurs’ Relief upon sale of the business. “A lot of people, in the West Country in particular, run holiday lets as a business, and deserve the same tax relief as any other business.”

Another benefit for local businesses would be the planned holiday from National Insurance (NI) for new business enterprises, she added. “Start-up businesses outside London and the South East are to be exempt from NI for first 10 employees, up to £5,000 per person. That equates to a tax break worth up to £50,000 for 400,000 businesses over three years – a valuable encouragement for brave new ventures.”

A £1000 increase in the personal allowance for Income Tax would save lower rate taxpayers £200 a year, while falling Corporation Tax rates, from 28% down to 24% for large companies, and 21% to 20% for small companies, were also to be welcomed, said Mrs Vickery.

However, the increase in Value Added Tax (VAT), from 17.5% to 20% from 4 January 2011, would make the cost of living more expensive. “Given that just a year ago we were at 15%, that is quite a steep rise. It will add to the cost of almost everything, and will make cash flow more difficult for VAT-registered businesses.

“That said, we were prepared for swingeing allowance cuts and steep tax rises in this Emergency Budget. Many of the proposals made by George Osborne were less onerous than expected. Rural businesses now need to ensure they understand the implications of such wide-ranging changes, and take professional advice to mitigate higher tax bills in the future.”

For more information contact Catherine Vickery on 01935 426181, or e-mail: catherine.vickery@oldmillgroup.co.uk.

With the new government seeking to tackle the massive budget deficit, Capital Gains Tax (CGT) could become one of Chancellor George Osborne’s targets in his first Budget, warns head of rural services Mike Butler. “Current CGT rates are set at between 10% and 18% – well below income tax rates. It is possible that Mr Osborne will increase CGT to as much as 40-50% in his Budget, which is expected by the end of June.”

Farmers should therefore consider crystallising capital gains now – whether in the form of a sale or gift – to lock into the potentially lower tax rate. “If you are planning to sell an asset in the coming years, it could be worth gifting it to a trust to crystallise the capital gain now, to reduce the liability on its ultimate sale,” says Mr Butler.

Equally, those with loss-making assets like milk quota should defer crystallising the loss until the envisaged higher tax rate comes in, to make better use of their loss relief. “For example, a farmer with £150,000 of milk quota losses could claim £15,000 of CGT saving now under the existing 10% Entrepreneurs Relief. But if they delayed that sale until after the Budget, the same quota could yield a £60,000-£75,000 saving under a possible 40-50% tax rate.

“If CGT rates are set to rise in the short term it is essential to plan ahead and act quickly to secure the optimum timing of asset disposals. Taking professional advice and acting now could save you a vast sum in the future.”

For more information contact Mike Butler – Tel: 01935 709321, or e-mail: mike.butler@oldmillgroup.co.uk.

Farmland, buildings and houses have traditionally escaped Inheritance Tax through agricultural exemptions. But HM Revenue & Customs (HMRC) is targeting these areas in a bid to raise taxes, and farmers need to be extremely careful to avoid the ever-tightening noose.

“We are seeing an increasing number of cases where HMRC is challenging whether farmhouses, agricultural buildings, and even the land itself, should qualify for Agricultural Property Relief (APR),” says Catherine Vickery, rural tax specialist at Old Mill Accountants. “This leaves the farmer’s beneficiaries in a very difficult position of either having to pay up to 40% Inheritance Tax on the asset, or prove its use really was agricultural in the two years before the farmer passed away.”

A common problem is when the farmer has retired, but still lives in the main house. “HMRC is saying that the house ceases to be a farmhouse, and therefore doesn’t qualify for APR. Ideally, the retiring farmer should move out and pass the house down to his children, who are still actively farming. But that isn’t always practical or possible, so it is important to keep the farmhouse as the hub of farming activity – for office work, farm meetings, and so on.

“The retiring farmer should remain active in the business – stay in the partnership and have an input to the daily farm management. It is the function of the house that is important, not the physical tasks you perform – so you need to keep records of all agricultural activity in the house, as proof should your beneficiaries need it.”

The same is true of farm buildings, which HMRC could argue are no longer in agricultural use, says Mrs Vickery. “Keep notes of any building work, photos of the building in use – anything which will back up your argument.”

Sadly, a spate of recent cases has highlighted the difficulties encountered when a farmer is taken ill, and has to leave the farmhouse for a while. “It can be very distressing if a parent is taken into care before they die, and the beneficiaries later discover that the farmhouse doesn’t qualify for APR, landing them with a hefty, and unexpected, tax bill.”

Case law is hazy on how long a house must be out of daily farming use before it loses its agricultural exemption. To be on the safe side, farm workers should continue to use the property for meetings and office work, keeping phone lines open and council tax paid, to show that it is in constant agricultural use.

Another HMRC trick is to restrict the amount of APR to 70% of the farmhouse’s true market value, leaving the remaining 30% liable to tax. “The Revenue’s argument is that a house tied to agricultural use is worth less than if it were on the open market – so the agricultural value of the house should be similarly reduced,” says Mrs Vickery. “However, there are no grounds for such a blanket restriction – every case must be considered separately on its own merits.” Care should also be taken where Bed & Breakfast is offered, as this may jeopardise the APR claim.

A similar tactic affects farmland that is bordered by residential houses. In these cases HMRC is claiming that the neighbours may have been interested in purchasing the land as pony paddocks, adding significantly to its agricultural value. “As in all Inheritance Tax cases, it is difficult to prove something after the farmer has died. Fortunately, the burden here rests on the Revenue to produce written evidence of such interest shown at the time.”

Other possible stumbling blocks include land let for grass keep or entered into the Farm Woodland Premium Scheme. “HMRC claims that land entered into the woodland premium scheme is no longer agricultural, so does not qualify for APR. However, it may then be eligible for Business Property Relief, so take advice before committing yourself either way,” says Mrs Vickery.

With grass keep, the owner needs to be actively managing the land and selling the grass as a feedstock, which is zero rated for VAT purposes. “In all cases of contract farming and tenancies, the more you do and the more the farmhouse is used in the business, the more likely you are to retain agricultural exemptions. Again, keep as many notes as you can, as such agreements are far harder to prove once the farmer is dead.”

It is clear that in the current climate, farmers should not assume that their assets qualify for agricultural tax relief. “If there is any uncertainty over their eligibility, consider gifting those assets to the next generation now, or gather as much evidence as you can to prove that they are still in agricultural use. HMRC is getting very keen on attacking farmers, but they haven’t got any basis to be as tough as they are, so you have to resist – don’t let them get away with it.”

For more information on Inheritance Tax relief, contact Catherine Vickery on 01935 426181.

Lower milk prices during 2009 have eroded dairy farmers’ profits, but cheaper inputs mean many producers will be able to continue rebuilding their balance sheets. And with a number of tax incentives to take advantage of, now could be the perfect time to invest in the business.

Although last year was a turbulent one for the wider economy, it was very much business as usual for many milk producers. A 10% slide in milk prices proved disappointing, and Old Mill expects dairy farm profits to be slightly lower than in 2008/09. Fortunately, some input prices have also eased, offering producers some further recovery after many difficult years.

Fertiliser prices fell significantly, as did domestic feed costs. However, overall feed prices remained stubbornly high due to imported commodities like rapeseed and soya, which proved expensive, partly due to the weaker pound. However, one benefit of the weak pound was its positive effect on the Single Farm Payment, which increased by 15% between 2008 and 2009.

The cost of borrowing also remained low, as a result of the cheap Bank of England base rate. Although some banks took the opportunity to increase their lending margins, many dairies have taken advantage of the cheaper finance to invest further in their units.

Clearly, it is vital to consider how to make such investments in the most tax efficient manner. The Annual Investment Allowance allows businesses to write off the full cost of qualifying plant and machinery expenditure in the year of purchase, up to a limit of £50,000. This can obviously provide valuable tax savings.

However, many dairy farmers are unaware of the additional one-off tax savings available in the current fiscal year. This means that any expenditure above the £50,000 allowance qualifies for 40% relief in the first year, rather than the usual 20%. This is one-year concession runs until 5 April 2010 for sole traders and partnerships, or 1 April 2010 for limited companies, so farmers need to act now to make the most of it.

Those considering investing in agricultural land or buildings have often done so using a pension fund – a particularly popular option for higher rate taxpayers. Even though the cost of borrowing is at a record low, many farmers resent having to repay the cost of their investment out of profits, which have been taxed at up to 40%. By using a self invested pension, the business pays for the project tax-free, saving up to 40% on up-front costs. So a building which would normally cost £100,000 to construct would effectively cost the farmer £60,000 – a healthy saving.

The 2009 Budget dealt a harsh blow to those earning more than £150,000 a year – who will soon be subject to a new 50% to rate of income tax. National Insurance contributions for individuals are also set to rise. However, in stark contrast the Government kept the small companies’ Corporation Tax rate at 21%, leading many of our clients to consider incorporating their businesses.

The potential savings from using a limited company can be dramatic. A husband and wife partnership making profits of £100,000 could save around £7,800 – a 30% reduction in their tax bill. Even with lower profits of £60,000 the saving could be as much as £2,700 – a 22% decrease in tax liability.

Limited companies can also be more efficient structures within which to repay debt. A limited company could be left with 79p in the pound for debt repayment, rather than 59p for a higher rate taxpayer trading as a sole trader or partnership, who would suffer income tax and National Insurance at a combined rate of 41%. Unlike pension contributions and plant and machinery purchases, a limited company structure has the added benefit of reducing income tax liabilities without tying up excess cash.

Preserving cash flow has been critical for all businesses during the economic crisis, and dairy farms are no exception. Many farms will have paid tax at the end of January, based on higher profits shown in their 2008/09 accounts. Sole Traders and Partnerships may have also included a payment on account towards their current tax year. With profits likely to slip during 2009/10, farmers should consider reclaiming some of this payment on account tax from HM Revenue & Customs, particularly where they have reduced profits through hefty plant and machinery expenditure in the current year.

With a general election looming, this year is likely to hold a few surprises in terms of tax changes, but there is much that farmers can do to structure their tax affairs as efficiently as possible. Planning ahead and taking the right advice is key to this, and Old Mill is always pleased to help. For more information contact Andrew Vickery on

01392 214834.

The firm, which also has offices in Shepton Mallet, Yeovil and Exeter, merged with long-established Devizes accountants LE Bull and Co almost a year and a half ago but has expanded considerably since then and needs a new base to accommodate the increase in staff.

“When we merged with LE Bull and Co in November 2008 we had 12 office-based staff in Devizes, this has now grown to 19 and with a need to increase to 25 in the short term the existing offices are bursting at the seams,” explains Mike Butler, Finance Partner at Old Mill.

He continued, “We are moving to the Challymead Business Park in Melksham, where the modern offices will enable us to continue to grow and provide a home for up to 40 staff.”

Mike says the move will enable Old Mill to provide services to a much wider range of local businesses.

“We will now be able to make our proactive accountancy services available to all Wiltshire businesses, large and small and across all sectors of industry,” he said.

“And with the addition of newly appointed IFA Paul Heaphy we will also look to expand the financial planning team that we set up in the region this summer.”

Paul Neate, the partner in charge of the Melksham office, says although he will be sad to leave Devizes, he is looking forward to the challenges that lie ahead.

“We had spent nearly 18 months searching for an alternative office in town but unfortunately there was just nothing suitable available,” he said.

“We will be very sad to leave our offices in Devizes where I personally have worked for 30 years, but look forward to continuing to provide a high level of service to our loyal existing clients and from that base serving many new friends in the future.”

Many producers use self-employed contractors for milking or other services, as it can be cheaper than employing full-time or part-time staff. However, by doing so, they could lose agricultural tax relief on any properties occupied by the contractors, as well as leaving themselves open to paying National Insurance and Income Tax arrears.

“Very often a herdsman who considers himself to be self-employed is actually employed in the eyes of the law,” says Mike Butler, Partner at Old Mill Rural Services. “An individual’s view of employment status is irrelevant – it is a point of fact to be decided by the correct legal interpretation of the facts of the case. And, if a self-employed contractor is in reality found to have been employed, and walks away without paying the duty they owe, the employer will be liable to pay that missing tax and National Insurance.”

Points to consider include whether the contractor shares some of the financial risks associated with the work, what proportion of income they derive from a single client, and whether they personally have to carry out the tasks, or can engage a sub-contractor, for example.

But it is not just Income Tax and National Insurance that the farmer could be liable for. If the contractor is truly self-employed, it has significant implications for relief from Inheritance Tax and Capital Gains Tax. “A farmer who provides a self-employed contractor with a farm cottage to live in could find that the dwelling no longer qualifies for Agricultural Property Relief from Inheritance Tax. Equally, the property could lose its status as a business asset for Entrepreneur’s Relief or Rollover Relief for Capital Gains Tax purposes,” says Mr Butler.

“In those cases the farmer may well end up paying £10,000s in tax, merely to have the comfort of a slightly cheaper self-employed herdsman. Cutting corners is the worst possible option when it comes to tax planning. It is important to get a full and thorough review of your circumstances to ensure that tax liabilities are kept to a minimum.”

Manufacturers who use alcohol in their products, such as brandy in Christmas puddings or cider in sausages, can claim back the excise duty through the little-known Alcoholic Ingredients Relief. “Tax makes up a huge percentage of alcohol prices, so manufacturers who use duty-paid alcohol in their ingredients could save a significant amount,” says associate director Mark Peters.

Processors must enter their claims directly to HM Revenue & Customs within a month of the alcohol purchase, and usually for a three-month production period. Separate claims are required for each manufacturing premises, and must amount to at least £250. “Large users with Excise Duty bills exceeding £5,000 a year can apply for approval to receive alcohol ‘duty unpaid’ for food manufacturing purposes, which negates the need for them to make regular repayment claims.”

HMRC requires claimants to adhere to certain control procedures, and further conditions apply, particularly in relation to the type of food products that are eligible for relief, he adds.

Another often overlooked relief concerns excise duty paid on heavy oil used by growers of horticultural produce. “Rebates are available for duty paid on fuel oil used to heat buildings, structures or the ground to help grow produce like fruit, vegetables, flowers and herbs,” says Mr Peters. “Seeds, trees and shrubs are also covered, although hops are not.” Relief is also available for fuel oil used to sterilise the ground where such crops will be grown.

Claims can be made for sums greater than £50, for any period between two months and three years, but must be submitted to HMRC within three months of the date to which the claim relates. “Again, further conditions and controls apply, so it is important to ascertain whether your business is eligible. However, in both these scenarios it is possible to reclaim a substantial amount of tax back, which will offer a healthy boost to profits.”

Although incomes have fallen this year, many farmers are still paying tax on forecast higher profits, following last year’s improved trading conditions. “While paying tax is often a sign of a profitable enterprise, paying too much tax starves businesses of cash flow, often at times when cash is particularly tight,” says Partner Mike Butler.

“Many farmers have had a reasonably profitable couple of years, leading to heavier tax liabilities. Hopefully, they will have taken advantage of tax planning opportunities like farmers’ averaging, use of pensions or perhaps creating limited companies to reduce that tax burden. Even so, many will still be paying tax on future profits on the assumption that the better times are continuing. Regretfully, that assumption is unlikely to be correct.

“Higher input costs and falling commodity prices mean that profits are likely to suffer for 2009/10 and possibly beyond. With most of the tax system based upon making advance payments on account, those farmers whose profits are falling should reduce their payments on account now.”

HM Revenue & Customs does not usually pay interest on overpayments of tax – and what little interest may be paid will generally come some eight months or more after the end of the tax year. “It is therefore far more sensible to act now to ensure you are paying the correct amount of tax, instead of waiting until you have prepared the year’s accounts, only to find that you need not have paid tax in the first place,” says Mr Butler.

“There are of course other opportunities to mitigate tax if you are facing a profitable year, such as maximising tax relief on plant, equipment and building costs. The key is to have a strong understanding of your business’s position as you go along, and work closely with your accountant to identify the best way forward, before the end of the tax year.”

For more information contact Mike Butler at Old Mill on 01935 709321.

“Through his pre-budget report, the chancellor may well have inadvertently encouraged many small businesses and self employed people to consider becoming limited companies in order to enjoy the ‘tax breaks’ such a change would offer,” explains Old Mill’s tax planning specialist Catherine Vickery.

The two announcements within the pre-budget that may encourage further incorporation among small business, says Old Mill, are the Chancellor’s decision to delay the 1% rise in Corporation Tax  – the tax paid by companies – for another year and his decision to increase the rate of National Insurance by 1% from April 2011.

Currently, companies making profits of less than £300,000 pay corporation tax at 21% while a self employed individual making profits more than around £44,000 has to pay 40% tax whilst if profit is in excess of £150,000 from 6 April 2010 they will have to pay the new higher rate tax of 50%.

“If an individual earning £150,000 or more from a self-employed business decided instead to become a limited company, they could pay themselves a salary and ensure they stay within the basic rate of tax and if they need more income, they can pay themselves in dividends, saving themselves a considerable amount of tax,” explains Catherine.

“And, the 1% rise in the rate of National Insurance from April 2011 also makes incorporation a more attractive proposition, because National Insurance is only payable on salary and not total income,” continues Catherine.

“Therefore, if a small business or self employed business was to become a limited company, they would only have to pay national insurance on the salary they paid to themselves and not the total profit earned,” she said.

If you run a small business or are self employed and are considering incorporation, contact Catherine.Vickery@oldmillgroup.co.uk or call 01749 343366.

Over the past few months Old Mill has found two areas where their constructive help they has been of great help. The first is dealing with bank managers, especially where there is a need to gain extra funding, or to rearrange existing funding. Here measures such as identifying special items, bolstering the balance sheet, changing the year end or providing a robust narrative have been show to be invaluable.

The second area is in the perennial fight with the tax man. The government is caught in a paradox where they want to both encourage businesses to grow but at the same time need to increase taxes to balance their books. This results in a fluid situation where Old Mill can help clients both defensively, to avoid some of the traps, and positively, to take advantage of some aspects of the tax regime which still look attractive.

If you would like a free no obligation meeting to see if Old Mill can help you please email yeovil@oldmillgroup.co.uk

Usually farm cottages occupied by farm employees qualify for 100% IHT relief, says Mike Butler, Head of Rural Services at accountant Old Mill. But from a tax perspective there is a huge difference between farm workers engaged through the PAYE system and those who are registered as self-employed.

“Some farmers may find it attractive to save on National Insurance and other expenses by using self-employed labourers. But if they provide accommodation for their workers, they must be aware of the impact such an arrangement could have on the taxation of farm cottages, potentially costing the business £100,000s.”

For example, a farm cottage worth £275,000, which is occupied by a farm employee, would qualify for 100% IHT relief. But if it housed a self-employed worker it would become liable to IHT charges of 40%, raising a tax bill of £110,000.

“When considering whether a property is subject to Inheritance Tax, one must at least look at its use and qualifying occupation periods for two years prior to the date of death,” says Mr Butler. “It is essential that farmers are aware of this potential pitfall, and plan now to avoid hefty tax liabilities in the future.”

The move is part of an international effort to crack down on tax evasion, and comes after an agreement between Britain and Liechtenstein which encourages British clients with secret accounts in the Alpine state to disclose billions of pounds in untaxed money or face a penalty rate of at least 30 per cent and an increased risk of criminal prosecution.
While HM Revenue & Customs can now seek information from banks, it is offering Brits the chance to settle unpaid liabilities at a lower penalty rate of 10 percent under the New Disclosure Opportunity, and south west accountants Old Mill is warning people affected to act now.

“These two developments add considerably to HMRC’s powers to help counter tax evasion,” said Bruce Lockhart, Tax Partner at Old Mill Accountancy LLP, “and those who have been evading tax by keeping their money offshore will now have to own up or risk paying some serious fines; some could even face criminal charges ”

Under the “New Disclosure Opportunity” (the original “Offshore Disclosure Opportunity” in 2007 focused on the customers of five large banks), tax payers are being given a chance to come clean and to avoid potentially massive penalties, and Old Mill is encouraging those affected to act now.

“As well as being an opportunity to regularise their personal affairs, the New Disclosure Opportunity offers tax payers the chance to manage down and contain related exposure to penalties, to a probable 10 per cent of the tax previously unpaid (or 20 per cent for those who didn’t respond to HMRC in 2007), in response to an offer made under the original Offshore Disclosure Opportunity”, explained Mr Lockhart.

There is a three month window of opportunity from 1 September 2009 during which  tax payers will be able to approach HMRC with a view to making full disclosure (in certain circumstances this period will be extended to 12 March 2010 where disclosure follows a prescribed and “on line” process).

“In the event of continued non disclosure and future “discovery” on the part of HMRC, which is now far more likely given their new powers, delinquent tax payers can expect little sympathy on the part of the Authorities,” warned Mr Lockhart, “expect draconian penalties of up to 100 per cent of the tax unpaid in addition to interest charges.

“This is possibly HMRC’s largest tax evasion initiative to date – those who ignore it do so at their own peril,” he said.

“With cereal prices in freefall and many other commodities following suite, a lot of farmers are potentially operating at a significant loss this year,” says Partner Mike Butler. “Even though they benefited from improved profits last year, many will be worried about the financial outlook over the next 12 to 18 months.”

Poor summer weather has compounded lower commodity prices, with many farmers suffering from low cereal yields and unwelcome drying costs, particularly in the West Country, he adds. “The strengthening Pound and firming oil prices are also adding to the uncertain economic outlook.”

Farmers must always be able to react quickly to volatile market conditions – and part of that must be in the management of their tax affairs, says Mr Butler. “Over the past couple of years we have concentrated on minimising tax on what were, for many, relatively strong profits. But now farmers’ focus must be on recovering tax and maximising cash flow during this difficult trading period.”

Historically, farmers could only recover tax paid in the immediate previous year – but recent concessions mean they can recover tax paid up to three years prior to a loss-making year, he adds. In addition, they can make use of the usual tools to mitigate tax, such as farmers’ averaging; 100% tax relief on equipment expenditure up to £50,000 per annum; and pensions relief. 

“It is also important to operate the correct year end. It is possible to accelerate the reporting of more difficult trading conditions, to reduce the delay until tax refunds can be obtained.” Other options include changing the timing of commodity sales, and reducing tax payments on account.

“Old Mill is already seeing tax savings of more than £30,000 per farming business – or typically £7000- £8000 per partner,” says Mr Butler. “Farm businesses, particularly those which have paid significant amounts of tax in the previous three years, should be looking at their options now. It may be possible to recover some of that tax, reduce future payments on account, and minimise the overall tax burden by careful planning during the remainder of the financial year.

“Farmers and rural businesses should also seek to maximise support in the form of tax credits, which can be a vital lifeline for families during low income periods. With cash flows becoming tight, and many businesses likely to be operating at a loss, it is imperative that farmers plan their fiscal affairs in the most beneficial way possible.”

“Most people don’t take advantage of their full tax free allowance,” says Simon Cole, Chartered Financial Planner at Old Mill Financial Services, “and by not using our full allowance we are in effect, giving money back to the taxman.”

“The current allowance is £7,200, up to £3,600 of which can be put into a Cash ISA; the rest – or the entire amount if you wish – can be invested into a Stocks and Shares ISA.

“And, although interest rates are very low at the moment, doesn’t mean its not good financial sense to invest in an ISA.

“In fact, given the level of Government borrowing at the moment, the likelihood is that tax will go up as the treasury needs to create revenue through tax.  A way that the individual investor can do something to avoid some of these rises is by making use of any tax breaks they can.”

And, says Mr Cole, ISAs should be at the top of the list for this tax year, and using your new allowance from 6th April onwards – up to £14,400 sheltered from tax in a matter of weeks.

“ISAs offer tax breaks for both higher and basic rate tax payers because you pay no capital gains tax, and no additional income tax making it one of the most tax-efficient ways to save and invest.”

And for those who have already used their allowance but are not happy with the returns they are receiving, transferring your existing ISAs to another ISA fund manager at any time is possible if you are not happy with your current deal.

“Cash ISA rates are not great at the moment,” he said, “and although you can transfer your Cash ISA to another, better paying Cash ISA, it is worth taking a look to see if it is worth transferring your cash into a Stocks and Shares ISA instead.

“When rates are high, you can get fairly good income and growth from a Cash ISA with little or no risk, but now, it is hard to get the same returns unless you are prepared to take on a little more risk.”

Although Stocks and Shares ISAs do have more risk, they also offer the potential for higher returns over the long term, and now, with stock markets so low, it could be a good time to invest, advises Mr Cole.

“It is also possible to make regular investment contributions; when the markets are falling, you buy more with your payment each month which means that when the market rises again, you can really gain, and of course, the profits you make are completely tax free.”

To find out more about making the most of your tax free allowance, contact Simon Cole at Old Mill Financial Services on 01935 709364 or by emailing simon.cole@oldmillgroup.co.uk or visit www.oldmillgroup.co.uk

The seminar, entitled “You, your car, company cars and tax” looked at a wide variety of topical issues relating to cars and the related taxation – both subjects close to many business peoples hearts.

Craig Howes and Mark Peters, Directors at Old Mill, spoke about the key issues surrounding the changes to company car tax. This is now calculated solely on cars CO2 emissions -  and it is now very important to consider the emission band the car sits in when buying a new car.

Craig and Mark, also talked about the Government’s change to the tax regime to abolish the writing down of balancing allowance for cars over £12,000. This significantly extends the time it takes to get tax back after the car has been sold – and for high emission cars this could now take 20 years. This means that people should seriously consider the tax advantages of leasing. Leasing tax rules are much simpler than for owned cars and all costs involved are claimable against tax, so leasing, said Old Mill, could be the way to go.

Tony Grice, Sales Development Manager for Volvo talked about corporate manslaughter and the fact that from April this year, if employees are involved in a fatal car accident whilst on business – even if they are driving their own private car, their employers could end up in court facing charges of causing death by negligence. It is the responsibility of employers to ensure any vehicles used by employees on business are fit for the purpose. This is causing companies who have ceased providing company cars to reconsider their position.

He highlighted the importance of car safety and the wellbeing of employees using thought provoking images and videos to show which cars are the safest to drive.

Craig Howes comments “This was a different type of seminar looking at a very different topic. However the response of the businesses that attended was very positive. It bought to their attention important matters which they may well have overlooked.

Anyone who would like more information about any of the issues raised should contact Craig on 01935 426181.

Old Mill Managing Partner Jolyon Stonehouse comments, “We have been enjoying rapid organic growth, increasing both income and headcount by more than 10% each year since the management buy-out. However we now feel it is appropriate to enhance our business further by merging with LE Bull and Co. Their client base fits well with our own, and they share our philosophy of providing first class client service while being an outstanding place for staff to work. We are excited by the prospect of a Wiltshire office which will help us serve our considerable number of existing clients in the county and provide a base to further grow our business there.”

All members of the staff of L E Bull and Co will be taken on by Old Mill and there are expansion plans for the office as Old Mill introduce their full range of client services.

Paul Neate senior partner of Bull and Co observes “The synergies between the two companies are excellent. We specialise in looking after farming clients and the Old Mill rural services teams are already the leading supplier of accounting services to West Country agriculture.  Our existing clients will be able to benefit from the specialist tax and financial services advice that is part of the Old Mill package. .”

Paul will become a partner in the Old Mill Rural Services team and John Smith, his fellow L E Bull and Co partner, will become the Senior Manager in the Rural Service team.

Old Mill already operates from offices in Shepton Mallet and Yeovil and earlier this year launched a full service offering office in Exeter.

Businesses with finance scattered across a number of different providers could save money by consolidating their borrowing into one loan or mortgage, he explains. “Despite the credit crunch agricultural banks are still very much open for business and there are still some good deals out there.”

Improved profits in some agricultural sectors could either be used to reduce debt or reinvest in the business, and farmers releasing larger capital sums could make wise use of changes in the tax regime, he adds.

“Anyone with non-business assets like buy-to-let properties or quoted shares could benefit from recent changes to CGT, which have reduced tax on non-business capital gains from up to 40% to a maximum of 18%.”

For example, a rental property purchased five years ago which now stands a capital gain of £150,000, owned jointly by a husband and wife paying the higher tax rate, could be disposed of with a tax liability of £27,000 compared to up to £54,000 under the old regime. “Now could now be the ideal time to release funds from such investments to repay business borrowing or fund new projects,” says Mr Vickery.

New investments, such as expanding a dairy enterprise or building a new grain store, should always be carefully considered from both a financial and a tax perspective. “The phasing out of Agricultural Buildings Allowances will play an important part in your calculations, but there are other new tax reliefs, including changes to Capital Allowances, which could be particularly beneficial,” he adds.

“Whatever your situation, it is worth speaking to your bank manager and scouring the market to get the right finance package to suit your business. If you are considering making new investment decisions or disposals take professional advice – this could be the right time to make changes for the better.”

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 160 staff in three West Country offices. The Rural Services teams are headed by Partners Mike Butler (Yeovil) and Ian Sharpe (Shepton Mallet). Looking after nearly 1,000 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.

From July 1 2008, Fuel Advisory Rates for company provided petrol vehicles with an engine size of 1400cc or less will go up 1p to 12p, for diesel, the rise is 2p up to 13p. For vehicles with engine sizes up to 2000cc, the rise is 2p for both petrol and diesel, going up to 15p and 13p respectively. And for larger vehicles, petrol reimbursement has gone up from 19p to 21p and diesel from 14p to 17p. (See table below for full rate information).

But, for those who drive their own cars, the AMAP (Approved Mileage Allowance Payments) hasn’t changed, in fact, at 40p for each business mile up to 10,000 and 25p for each over 10,000, it has remained static since 2002.

Despite the fact that evidence from both the RAC and the AA suggest that the true cost of private mileage is now 50p, and many groups are actively lobbying the Government for a long overdue increase, HMRC says its research shows that no changes are necessary in the foreseeable future, and this says Andrew Wholey, tax consultant at Old Mill Financial Services, means that employees undertaking business mileage in a private vehicle are losing out.

“Due to the fact that Government has refused to raise the AMAP, many employees undertaking business mileage in their private car incur actual costs in excess of the rate at which they can be reimbursed by their employer,” said Mr Wholey.

“While employees who drive company owned vehicles have seen regular increases over the years – 50 per cent since 2002 – it is an entirely different story for employees who do not benefit from the use of a company car and have to pay all their own running costs – not just fuel, but tax, insurance, depreciation and any other costs associated with running a car.

“This group are really losing out due to the fact that the AMAP – which is supposed to take all the costs of running a car into account – has not seen an increase in six years, despite the fact that in that time, the cost of fuel has risen from 74p a litre in June 2002 to 118p a litre now.”

And, says Mr Wholey, this situation is made worse still where instead of adopting the AMAP, employers use the lower Fuel Advisory Rates for reimbursing the cost of fuel and business mileage undertaken in an employee’s private car. Employers too, are trying to contain costs and this practice is increasingly common.

“In this situation,” he explains, “it is left to the employee to claim a tax deduction on their personal tax return equal to the difference between the two contrasting rates.

“This can be a daunting prospect for some, and many simply don’t bother. But they should, because, for a higher rate tax payer undertaking 6,000 business miles, the difference between the 40p AMAP and the 15p Fuel Advisory Rate is 25p per mile – an annual tax save of £600.”

Although, says Mr Wholey, an increase in the AMAP is long overdue, in the meantime he advises employees who drive their own vehicles that are only being reimbursed using the lower Fuel Advisory Rates (or another rate, lower than the AMAP) to at least ensure that they benefit from the additional tax relief they may be entitled to.

“Claiming back the difference between the Fuel Advisory Rate and the AMAP isn’t as complicated as they may think and in this way they can mitigate the impact of a “double whammy” as the costs of fuel continue to escalate,” he said.

Ends

Previous Rates

The new Enhanced Capital Allowances (ECA) offer energy saving or water conserving plant and equipment a 100% write off in its first year, says accountant Old Mill Rural Services. “This could be a major boost for anyone considering putting in new dairy infrastructure to meet tighter regulations under Nitrate Vulnerable Zone proposals, for example,” says Mike Butler, director of rural services.

Eligible water conserving options include water efficient taps, showers and toilets, slurry separators, meters, and rainwater harvesting equipment. Energy saving lighting, refrigeration equipment, boilers and compressors also qualify for the new allowance.

“With improved profits in arable and dairy sectors, as well as tightening environmental legislation, many farmers are planning significant reinvestment in their business over the coming years,” says Mr Butler. “This new allowance could provide them with a major tax saving for adopting environmentally-friendly practices. Not only will they have lower tax bills, they will enjoy lower utility bills as well.”

Many dairy farmers are considering installing rainwater harvesting technology on new buildings, and it is possible that a significant proportion of the building itself will qualify for the 100% first-year allowance.

Currently, agricultural buildings qualify for a 4% annual allowance, but this is being phased out from April. Capital allowances on plant and equipment will offer a 100% write in the first year from April, up to a maximum of £50,000, followed by a 20% annual write-off thereafter. “This is great news for anyone buying new plant and equipment,” says Mr Butler.

“But someone buying a new tractor can quickly reach the £50,000 limit. Fortunately, the ECA will run alongside the normal Capital Allowance regime, and is not capped, so farmers buying a new tractor and investing in environmentally-friendly equipment will benefit from full relief on both purchases.”

This is particularly welcome, given the significant increase in farmers’ likely tax liabilities due to higher farm profits and the phase-out of Agricultural Building Allowances, says Mr Butler.

Anyone looking to erect a tax-efficient agricultural building and reduce their income tax bill should consider using a Self-Invested Personal Pension (SIPP), he adds.

“Take, for example, a farming partnership with £120,000 profit this year, which wants to erect a £120,000 new building. By paying £60,000 into a SIPP before April 5, and another £60,000 after April 6, the partnership will save £24,000 in tax for each tax year. They can then invest that money into the new building, getting 100% tax relief, and reducing the actual cost of the build to just £72,000.”

Fore more details on how to make the most of SIPPs or the new Enhanced Capital Allowances, contact Mike Butler on 01935 709301.

Ends.

Notes to editors

For more information contact
Alan Stone – Marketing Manager
Tel: 01749 335007
E-mail: alan.stone@oldmillgroup.co.uk

About Old Mill Rural Services
Old Mill accountants and financial advisers employ 160 staff in three West Country offices. The Rural Services teams are headed by Partners Mike Butler (Yeovil) and Ian Sharpe (Shepton Mallet). Looking after nearly 1,000 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.

Andrew first began his training 28 years ago at Arthur Anderson & Co in London, where his specialism was US and expatriate taxation. Most recently, he held the position of Director of Tax & People Services at KPMG, where his main area of expertise was International Executive Services.

Andrew began temping at Old Mill in January, where it became clear that his knowledge of international tax was very valuable to the Tax Planning Team; by February 11, he had joined the Yeovil office permanently as a tax consultant.

He says he is really looking forward to the new challenges working at Old Mill will bring, and despite his specialism in international tax, is keen to apply himself as a more general consultant.

“Over the past few years, I have been specialising in one particular area, but this new role is giving me the opportunity to get back up to speed with all the broader aspects of UK taxation, like corporate, capital gains and inheritance tax.”

The 49-year-old says he was attracted to Old Mill because of the firm’s reputation and the fact that he could relocate to his favourite part of the country.

“I had a real desire to change lifestyle and relocate from the Thames Valley because it is my favourite part of England,” said Andrew, who recently moved into his new home on the Dorset Somerset border with his wife and their many pets – two lurcher dogs, four chickens and a cat.

He says that once he had decided to move to the area, the choice of where to work was easy, “Within this market I was attracted to Old Mill because of its reputation, multidisciplinary approach and vision,” he said.

Bruce Lockhart, tax partner at Old Mill says Andrew is going to be a very valuable asset.

“As well as many years of international tax experience, both individual and corporate, and knowledge of mainstream UK employee taxation, Andrew has a great deal of sales and marketing experience that will add to Old Mill’s already impressive tax planning credentials and their ability to assist clients within the increasingly complex world of tax compliance,” he said.

Ends.

Notes to editors

For more information contact
Alan Stone – Marketing Manager
Tel: 01749 335007
E-mail: alan.stone@oldmillgroup.co.uk

Chancellor Alistair Darling today announced a new “Entrepreneur’s Relief”, providing a special tax rate of 10% on the sale of businesses, up a limit £1m. Capital gains over the £1m limit will be charged at the new CGT flat rate of 18%, due to be introduced in April.

“This new relief is worth £80,000 to an individual, if they use the full allowance over the course of their lifetime,” says Catherine Vickery, rural tax specialist at Old Mill’s Yeovil office. “But the problem is that it only applies to the sale of whole businesses or interests in a business.”

The relief will also apply to business assets, as long as they are sold complete with the business, but importantly it will not apply to individual business assets like fields or buildings, if they are sold in isolation.

“Under the current tax regime, farmers seeking to sell or gift business assets will qualify for Taper Relief and Indexation Allowance, reducing the tax rate to a maximum of 10%,” says Mrs Vickery. “But from April, these assets will be chargeable at the new rate of 18%, a massive hike in tax for rural businesses.”

Landowners letting out commercial units or farms will also not qualify for the relief, following a drastic tightening of business classification. “There are plenty of farmers out there who have been encouraged to diversify, who will now be penalised with an 80% increase in tax,” says Mrs Vickery. “Although some people are acclaiming Alistair Darling’s latest U-turn as a victory for small businesses, the reality is that only those who a selling up and getting out will benefit.”

Even those seeking to dispose of entire businesses should consider the loss of Indexation Allowance from April 6, as they may still be better off taking action before the new rules come in.

“There are ways to crystallise capital gains before April, to make the most of Taper Relief and Indexation Allowance,” says Mrs Vickery. “There may also be an opportunity for people to split up their existing business to allow for separate disposals in the coming years. However, as always, the devil is in the detail so it is essential to take professional advice and act now, before it is too late.”

Ends.

Notes to editors

For more information contact
Alan Stone – Marketing Manager
Tel: 01749 335007
E-mail: alan.stone@oldmillgroup.co.uk

About Old Mill Accountants and Financial Advisers
Old Mill accountants and financial advisers employ 160 staff in three West Country offices. The rural services teams are headed by Partners Mike Butler (Yeovil) and Ian Sharpe (Shepton Mallet). Looking after nearly 1,000 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.

Recent changes to Inheritance Tax (IHT) rules, announced in Alistair Darling’s Pre-Budget Statement, suggested a move to more straightforward tax planning. His guarantee of the full use of IHT nil rate bands for each partner means that, from October 9, 2007, a couple is able to pass on £600,000 of taxable assets tax-free.

But married couples and civil partners must not rely on these changes when planning to pass on their estate, warns Chartered Financial Planner Julia Banwell. “Quite a few of our clients think they can now leave everything to the surviving spouse and ‘save’ their nil rate band for their partner,” she says. “But with legislation and government policies likely to change many times over the next 5-50 years it would be imprudent to rely on these new proposals in the long term.”

Rather than taking any chances with IHT, couples should consult their financial advisers and solicitor jointly, to draft a practical will to protect their assets for the future. “Many advisers underestimate the importance that flexible and well drafted trusts can play in a family’s longer term strategic tax and financial planning,” says Julia. “The absence of such planning can be financially disastrous for all concerned.”

For example, using a Nil Rate Band Discretionary Trust can protect assets in the event of the survivor requiring long term nursing care. They can also ensure that one’s estate is passed onto blood relatives, should the surviving spouse remarry, as well as protect against future divorce settlements among the inheritors.

“The increasing complexity of modern living means that some of our clients are wanting to look at ways of preserving assets they have worked hard to build up,” explains Julia Banwell.

Aside of these issues, couples must also consider the impact of potential investment growth and future indexing of the nil rate band level on their possible tax liability. “It is likely that your investments will grow in value more quickly than the nil rate band, meaning an estate which currently slips under the nil rate level could be liable to IHT in future years – something which can be avoided by putting it into a Discretionary Trust.”

In all cases the surviving spouse would be a discretionary beneficiary of the Trust, so they would not be put at financial disadvantage, Discretionary Trusts still have a large part to play in providing your family with maximum flexibility, regardless of current government policies. It is far better to base your financial planning on certainty within current rules, rather than hoping they will stay the same.

Ends.

Notes to editors

For more information contact
Julia Banwell – Chartered Financial Planner
Tel: 01749 335048
E-mail: julia.banwell@oldmillgroup.co.uk
Alan Stone – Marketing Manager
Tel: 01749 335007
E-mail: alan.stone@oldmillgroup.co.uk

About Old Mill Accountants and Financial Advisers
Old Mill accountants and financial advisers employ 140 staff in three West Country offices. The rural services teams are headed by Partners Mike Butler (Yeovil) and Ian Sharpe (Shepton Mallet). Looking after nearly 1,000 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.

For many, the highlight of the Statement was Mr Darling’s guarantee of the full use of the Inheritance Tax nil rate bands for both spouses, meaning a couple’s taxable assets of up to £600,000 will escape tax.

“However, this will actually have very little impact on the well-advised, as they would already have been achieving this through carefully drafted wills,” says Mike Butler, Partner with the specialist Rural Team.

More important to rural businesses are the planned changes to Capital Gains Tax (CGT) rules. These spell the end of Indexation, which gave an allowance for inflation between 1982 and 1998, and meant that if an asset had only increased in line with inflation then no CGT was payable. The benefit of this will be removed from April 2008.

Taper Relief is also to be abolished. Since 1998 Taper Relief has given a maximum tax rate of 10% upon the disposal of business assets, and even less in many cases. “Contrast this with the rate of tax suffered on the disposal of non-business assets of at least 24%,” says Mr Butler.

“With the planned introduction of a flat rate of CGT of 18% on the disposal of both business and non-business assets, it is clear who will be the winners and losers. Unfortunately those running businesses will be worst affected by the changes, which are due to be introduced next April,” he adds.

“Anyone seeking to gift or sell business assets should consider doing so before April 2008, to make the most of Indexation and Taper Relief benefits, and to avoid the increased CGT levy. This will particularly apply to disposals of old barns and farm land, especially if they have development potential.”

However, those looking to sell or gift non-business assets, including let properties and investments, should probably wait until after 6 April 2008 for maximum benefit.

Gordon Brown had already introduced other unpleasant surprises in his 2007 Budget, in the form of increases in the small companies’ Corporation Tax rate, from 19% to 22% by 2009, says Mr Butler.

“In the past, transferring a business to a limited company has proven extremely tax efficient, with lower tax rates on profits, and business asset Taper Relief from CGT on shares when winding up the business. The combination of modest rises in the small companies’ Corporation Tax rate and now the rise in CGT rates means that the decision to incorporate for fiscal savings is far less clear.”

Catherine Vickery, Old Mill’s Agricultural Tax Specialist, is working with the firm’s tax planning team to consider ways to utilise Indexation and Taper Relief before they disappear, adds Mr Butler. “But it is vital that anyone with assets sat at a gain considers their position, to make the most of this window of opportunity.”

Ends.

Notes to editors

For more information contact
Alan Stone – Marketing Manager
Tel: 01749 335007
E-mail: alan.stone@oldmillgroup.co.uk

About Old Mill Rural Services
Old Mill accountants and financial advisers employ 140 staff in three West Country offices. The rural services teams are headed by Partners Mike Butler (Yeovil) and Ian Sharpe (Shepton Mallet). Looking after nearly 1,000 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.

“The tax man is taking a more aggressive stance on agriculture, and this is one area where it is easy to fall foul of the rules,” says Mike Butler, partner at accountant Old Mill Rural Services. “People are diversifying and in particular developing buildings to let out either commercially or residentially. They assume that VAT is recoverable on the work done, but this often isn’t the case.”

When buildings are let out for residential use, VAT cannot be claimed on the initial, or maintenance, work, as tenants are not charged tax on the rent they pay. However, where buildings are let out for commercial use, VAT can be reclaimed on both capital and maintenance work, as long as the tenant is VAT registered and pays tax on their rent.

Landlords can also reclaim VAT on properties used by farm workers, as long as they are not paying a rent, says Mr Butler.

Fortunately, there is an allowance whereby landlords can recover up to £625/month in VAT, even if the property is one where the tax cannot normally be reclaimed. “This means that you can spend up to £42,000 a year and reclaim the VAT – saving yourself £7500,” says Mr Butler. “But if you spend a penny more you cannot claim any of the VAT back at all. The tax year for these purposes runs from April 1 to March 31, so be careful to spread any larger projects over two years.”

Ends.

Notes to editors

For more information contact
Alan Stone – Marketing Manager
Tel: 01749 335007
E-mail: alan.stone@oldmillgroup.co.uk

About Old Mill Rural Services
Old Mill accountants and financial advisers employ 140 staff in three West Country offices. The rural services teams are headed by Partners Mike Butler (Yeovil) and Ian Sharpe (Shepton Mallet). Looking after nearly 1,000 farmers they are one of the leading specialist farm accountants.

In recent years farmers have been able to write off 50% of the cost of machinery and plant in the first year, with a 25% allowance on the residue of equipment in succeeding years.

But from April 2008 the 50% allowance is likely be replaced with a 100% write off for qualifying plant and equipment purchases, up to £50,000. While this may sound attractive, any farmer spending more than £50,000 in any one year will not be able to claim any first year allowance whatsoever.

“What is worse, Gordon Brown has proposed to reduce the residual allowance from the 25% currently enjoyed to 20%,” says partner Mike Butler. “Furthermore, it is identified that fixed plant and equipment within buildings may not qualify for the normal capital allowances but will only attract a much lower 10% rate.

“Many farmers rely upon the claim for tax relief on plant and machinery to mitigate their tax liabilities,” he adds. “With increased mechanisation being used to compensate for lower labour levels, the recent run of first year allowances have made buying plant and machinery a relatively tax efficient option. But with the first year allowance now only available for the current year, this may be your last chance to enjoy those relatively useful tax breaks before they are taken away.”

At the same time, while the government is easing the Corporation Tax burden on large companies from 30% to 28%, it is racking it up from 19% to 22% for smaller businesses over the next two years.

This means that any companies with profits of up to £300,000 will not only be able to claim fewer tax allowance on purchases of plant and machinery, they will also be paying a higher rate of tax on their profits.

“While it may be cynical to suggest that only the largest businesses based in the City have the Chancellor’s ear, it seems clear that farmers and agricultural contractors are seeing their tax breaks being steadily eroded,” says Mr Butler. “And this all comes at a time when agricultural businesses desperately need to invest to prepare for a future with lower, decoupled, support payments.”

Ends.