Farming supports the largest manufacturing sector in the country and is responsible for the environmental management of over 80% of the countryside. Across the UK, farms provide the raw ingredients for the food & drink sector, worth a staggering £108 billion, providing a huge boost to the economy.
Over the years farmers have faced many periods of instability which continues as we proceed with Brexit. Farm accounts can be very complicated but offer a unique accounting treatment of profits over unstable periods to help prevent fluctuating tax liabilities. Averaging can be applied to profits earned from farming or market gardening in the UK, whether carried on alone or in partnership. Claims for averaging are given effect in, or by amendment of, the self-assessment return of the later year. Two-year averaging has been available for many years and this is now extended to five years in certain circumstances.
Harris Bassett work closely with their farming clients to not only ensure that they are using the correct business structure, but also to consider succession planning strategies to mitigate inheritance tax. The nil rate band for IHT has been frozen at £325,000 until 2020/21 which is available to both the husband and wife, in addition to this, £175,000 relief for the family home can be claimed providing the total estate does not exceed £2m. Harris Bassett encourages its clients to be proactive and ensure that plans are put in place to minimise liabilities, making full use of the available reliefs where possible.
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