COVID-19: Practical guidance for our rural and farming clients #20
In this update designed specifically for those in the agricultural sector we discuss the newly announced deadline date for conversion to Making Tax Digital, changes to the Residential Property Return and 30-day tax payment deadline, and period of grace elections for Furnished Holiday Lettings.
We also provide our guide to planning your family’s financial future and consider whether it’s worth accessing your pension early to supplement any shortfall in income from your farming business.
Finally, if you operate as a limited company you will find links in this update to watch back our webinar on ‘Demystifying Research & Development (R&D) for farming and agricultural companies’.
If you would like to explore ideas for your family or your business, increase your confidence in making financial or tax decisions or just talk your plans through, then please do give us a call.
29th July 2020
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Andrew Vickery See profile
The government have announced they plan to expand Making Tax Digital to all VAT-registered businesses from April 2022.
For farmers and agri-businesses, this means it will become legislation to only use online software to submit your VAT return after 1 April 2022.
Many in the agricultural industry utilise specialist farm management software such as Farmplan, Sum-It, Landmark, Promar and Xero. We recommend you take time to review or prepare for digital links with HMRC now, in order to be fully compliant for 2022. If you don’t already have compatible online software then do get in touch with your Old Mill adviser and we can talk you through the options available.
Our report on Xero Accounting Software for farming businesses gives you an indication of the benefits that moving onto a digital platform can bring to the business.
If you are a farming or agricultural limited company and were unable to join us last Friday for our live discussion on understanding and eligibility of R&D tax relief then you can watch it back here.
If you would like to discuss this further please contact Catherine Vickery or Aisha Perrott directly or alternatively email enquiries@om.uk.
During these uncertain times, farmers are considering ways to ease any financial pressures or supplement any shortfall in income from the farming business. One area to consider is the releasing of your pension, which you are able to from the age of 55.
Access our guide to find out more about:
- Unlocking/Releasing your pension early: Should you do it?
- Other savings you can use before you tap into your pension
- Tax implications
- Paying into your pension in the future
Your Old Mill adviser will be available to discuss any financial decisions you are considering.
While UK farming has continued as a comparatively less impacted industry during COVID-19, we are understandably receiving calls from clients querying advice on their family’s financial future.
We have produced a 6 step guide to manage your estate across the generations:
- Keep your Will up to date and have a Power of Attorney in place
- Consider the use of lifetime gifts
- Navigate Inheritance Tax (IHT) and reduce the liability
- Consider options for mitigating tax and protecting your wealth
- Help your future generations to build their wealth
- Make sure funds are available to pay any IHT bill
As of 6 April 2020, HMRC introduced radical changes in how to report disposals of UK residential property.
Individuals (including trustees and personal representatives) now have 30 days to report any gains and make a Capital Gains Tax (CGT) payment on account to HMRC.
You will be required to submit a Residential Property Return to HMRC within 30 days of completion of the disposal.
Considering the disposal would have previously been declared solely on the tax return, and the tax payable in line with the usual payment deadline (which could have been up to 22 months after the date of completion), this can be regarded as a considerable change.
We have produced a full article with details for consideration here.
Diversification into a Furnished Holiday Letting (FHL) business by utilising existing spare cottages or converting farm buildings is a good way to add extra income into a farming business. During COVID-19 we have come across instances where our client’s properties had guests in occupation at the point of lockdown, but consequently have been unable to move out of the property. This then led onto considering how this income would be treated under the strict FHL provisions.
If you have been in this situation click here to find out more.
With the increase in government support measures and communication there is, inevitably, those who will look to take advantage of the situation. Please be vigilant regarding official communication via email, phone, text and social media. HMRC has published the following advice:
Stop: Take a moment to think before parting with your information or money. Genuine organisations like banks or HMRC will not normally contact you out of the blue to ask for personal details.
Challenge: Could it be fake? It is ok to reject, refuse or ignore any requests. Only criminals will try to rush or panic you. Check GOV.UK for information on how to recognise genuine HMRC contact and how to avoid and report scams.
Protect: Forward suspicious emails claiming to be from HMRC to phishing@hmrc.gov.uk and texts to 60599. Contact your bank immediately if you think you have fallen victim to a scam, and report it to Action Fraud.
For more information, or if you have any questions about any of the above, please contact your Old Mill adviser or email enquiries@om.uk.