MAKE THE MOST OF TAX SAVING OPPORTUNITIES
This years Budget was widely condemned by those whose job it is to condemn these things.
And of course there were disappointments. Freezing hill livestock compensatory allowances for the second consecutive year, despite rapidly rising feed costs, was the biggest. According to one lobby group, 70% of all hill farmers face bankruptcy as a result.
Cuts in research and development, the withdrawal of marketing grants and an end to the school milk scheme are also potentially damaging to agriculture.
But not everything was gloomy and comments from the financial services side of the industry have been much more welcoming to Kenneth Clarkes plans. For while he shied away from headline grabbing cuts in income tax, (no doubt keeping something up his sleeve for next year), there were plenty of other measures that will be of real benefit to farmers and small businessmen in general.
For a start, the Chancellor re-affirmed his commitment to abolishing capital gains tax and inheritance tax, taking two major steps along that route.
By lowering the age at which individuals can qualify for CGT retirement relief from 55 to 50, he has made it easier for dairy farmers to cash in their quotas without being clobbered for tax (see page 6).
And raising the inheritance tax threshold for 100% relief to £200,000 will ease the burden of transferring businesses to the next generation.
For even though most farmland already gets full relief, there are plenty of other farm assets which do not.
The Budget also extended 100% relief to pre-September 1995 tenancies, but only in the case of the death of the tenant.
And all shareholders in farming companies, regardless of the size of their shareholding, now qualify for 100% business property relief from IHT, similar to the existing arrangement for members of a partnership.
On the downside, the cost of diesel went up 3.5p/litre and there is another £5 to pay on vehicle licences. But this is small beer compared with the 1% cut in corporation tax for small companies (to 24%), the widening in the allowances for income tax and the lower rates of tax on savings.
Against this background, one of the recurring themes in this years supplement is that the current tax regime is extremely benign. But this may not last much longer and farmers should be giving serious thought to their succession arrangements, as well as their accounting, to take advantage of the opportunities that currently exist.