Tax planning considerations
The mini budget on Friday, September 23 may impact this article, but the improved farming profits for 2021 harvest are projected to continue for the 2022 harvest year for our farming clients.
Cereals, dairy and livestock prices were generally improved for the year to March 31 2022 and although direct costs and overhead costs increased during that period and continue to increase, the projected profits for the 2022 harvest and year to March 31 2023 continue to be positive.
There are genuine concerns for rising costs for 2023 year and what sales may be in 2023, but those businesses which have had strong 2021 and 2022 years should be considering tax planning options for this tax year, in conjunction with cashflow at this time.
Examples of tax planning to consider would be to bring forward capital or repairs expenditure (only if those purchases were required), farmers (if not a limited company) may use two and five year farmers’ averaging, to smooth income levels and tax rates, pension contributions before April 5 2023, which reduce income subject to higher rate tax and incorporation options should also be considered where appropriate.
It is anticipated that tax liabilities this January and next July may be increased on previous years and completing your 2022 accounts and 2023 budgets at an earlier date would be best practice to enable cashflow and tax planning.
Roy Jackson is a rural partner at WR Partners
