Agriculture update for UK farmers – September 2015

Agriculture update for UK farmers – September 2015

Welcome to our first agriculture update for UK farmers, a new monthly edition on the Hawsons website.

Please do register for our agriculture newsletter if you would like to receive the agriculture update each month, along with our quarterly agriculture newsletter and topical sector developments.

Grants available in certain agricultural projects

Grants of between £5k and £150k are on offer to help groups of farmers, researchers and businesses research practical ways to boost productivity. Grants are available for projects up to 3 years in livestock, horticulture or forestry sectors.

DEEC (Department of Energy and Climate Change) has removed the option for Feed in Tariffs (Fits) claimants to lock into a level of support before a project is completed. Fits pre-accreditation is being scrapped from 1 October 2015. Previously, pre-accreditation rules allowed solar and wind projects above 50kw and all hydro and anaerobic digestion projects to lock into a level of support once planning permission and a grid connection had been agreed.

Consultation over the future of farmers’ averaging

Farm leaders call for flexibility in 5 year averaging rules from HMRC, following the announcement of new farmers’ averaging rules earlier this year. When the announcement was made we said that prior to the new rules coming into effect from April 2016 the Government will hold a consultation later in 2015 to clarify details.

That consultation on farmers’ averaging has started and the government consultation has proposed 2 options.

  1. Extending the existing 2 year farmers’ averaging scheme to a rolling 5 year basis with a volatility test to assess eligibility.
  2. An optional scheme where farmers could irrevocably opt-in for a fixed 5 year period, irrespective of volatility.

The NFU have said that there may be a case for the 2 year averaging period being retained as an additional option. The CLA points out that the volatility within the agricultural sector could be experienced over shorter periods than 5 years so there should be an option to choose averaging over a shorter period.

Other agriculture news…

  • Grain price movements are likely to be limited in the medium term due to harvest results and export competition say traders. Online grade training platform Graindex launched.
  • Recent drier conditions provided some relief for many arable farmers coping with a badly delayed harvest. Yields remain good but quality is still a concern.
  • Micro-breweries are providing a rapidly growing market for some specialist malting barley.
  • Potato prices dropped sharply in the week to 4 September 2015 with the average price falling £13.87T to £152.40T ex farm.

More from our agriculture experts

You can find all of our latest agriculture sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Martin Wilmott is a partner at Hawsons

Martin Wilmott acts as lead engagement partner for a wide range of corporate and non-corporate clients in the Doncaster office, especially in the Legal and professional, agricultural, transport, property and construction, manufacturing, healthcare and hospitality sectors. For more information or advice on anything covered in this article please contact Martin on [email protected] or 01302 367 262.

SME tax corner – the good, the bad & the chance

SME tax corner – the good, the bad & the chance

In this month’s SME tax corner we look at what’s changed in the world of tax for small businesses.

Good: R&D claims from SMEs increase by 23%

New figures released by HMRC earlier this month show that since the relief was launched in 2000 over 120,000 claims have been made and £11.4bn in tax relief claimed. Those numbers are continuing to grow and in 2014 the number of SMEs claiming R&D tax relief rose by 23%. In an article we published on the back of the HMRC R&D update you can see that R&D tax relief is available to small businesses across a number of different sectors, including manufacturing, healthcare, arts, construction and retail. The below table shows a breakdown of R&D tax claims by sector last year.

R&D statistics sep 20151R&D statistics sep 20152

Many small business owners may expect R&D tax claims in manufacturing, healthcare and IT, but may not necessarily consider its applicability to other, less obvious sectors such as arts, entertainment & recreation, transport & storage and wholesale & retail. It is therefore vital that if you’re developing a new product, service or process or materially improving an existing one, regardless of your size, you speak with Hawsons’ R&D tax specialists today.

Bad: Changes set to have considerably impact on buy-to-let profits

It was announced in the Summer 2015 Budget that the government will restrict the amount of income tax relief landlords can claim on residential property mortgage interest to the basic rate of income tax. Whilst this change may be good news for first-time buyers it brings bad news for landlords. Both landlords who have a sole buy-to-let property and landlords who have large property portfolios are set lose out following the change.

The change means that residential landlords will no longer be able to deduct all of their finance costs from their property income. Tax relief will instead be restricted to the basic rate. This measure is likely to make buy-to-let investments a much less attractive opportunity for small business owners in the future and early suggestions are that the two million buy-to-let landlords across the UK could lose around half of their profits.

To ease the impact the government will introduce this change gradually from April 2017, over four years.

Chance: Earn extra tax relief on pension contributions

A recent survey by Aviva found that as many as two in three people don’t understand pension tax relief. The survey also found that one in ten had never heard of pension tax relief. These statistics are worrying, particularly as investing in a pension and maximising the opportunities for tax relief on that pension is one of the most significant investments a person makes in their life.

Changes to tax relief on pension contributions were announced in the recent budget and you may wish to take advantage of the annual allowance for the 2015-16 tax year. Don’t miss out, act now!

More from our tax experts

You can find all of our latest tax articles and tax resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Scott Sanderson

Scott Sanderson Partner

Scott Sanderson began his career with Hawsons and trained as a Chartered Accountant, becoming a partner in 2015, specialising in the healthcare sector and small businesses. For more details and advice, please contact Scott on [email protected] or 0114 266 7141.[/author_info]

Is now a good time for a business acquisition?

Is now a good time for a business acquisition?

Is now a good time to be thinking about a business acquisition?

Over recent years the corporate acquisition market has been challenging for those wanting to complete deals. The appetite of funders to lend has been constrained and the price expectations of vendors have been relatively high as they hold on to notions conceived in the buoyant pre-2008 market. However, our experience on deals over the last twelve to eighteen months has led us to believe that the acquisitions market has now become increasingly attractive and that now is a good time to consider a business acquisition.

Why might now be a good time?

  • Good quality businesses available at realistic prices – Many business sales were deferred during the recession waiting for the economy and funding markets to improve. Owners of these businesses are now looking to sell and recent transactions have shown that vendors now have more realistic pricing expectations.
  • Funders have an appetite to lend – Banks liquidity positions are substantially improved with a strong desire to lend and at lower interest rates than have been seen for some time.
  • Preferential deal structures – There is now a general acceptance in the market place that deferred payment terms are required in order for vendors to achieve their price expectations whilst giving purchasers the confidence to invest.

How Hawsons Corporate Finance can help

At Hawsons Corporate Finance we have an experienced team of deal makers who have worked on 15 transactions with a total value of £70m over the last eighteen months, including:

Irwin Mitchell P&A deal Perrys acquisition of GK Group  Irwin Mitchell Berkeley Law

Thornhill heat exchangers ltd deal  Raveningham Holdings Limited Wild Engineering Limited

We have the flexibility to tailor our services whilst being able to offer a full deal advisory service including, identifying targets, initial approach, negotiation of terms, due diligence, tax efficient structuring and raising finance.

As well as the technical excellence you would expect as qualified chartered accountants the team also works closely with the in-house tax specialists at Hawsons and has extensive experience in both industry and corporate banking, bringing a broad perspective to our advice and service.

If you are thinking about a business acquisition please give me a call on 0114 266 7141 or email at [email protected] for a free initial meeting.

Pete Wilmer partner

Pete Wilmer heads up the firm's Corporate Finance service offering. Having worked in the corporate finance arena for many years with a national accountancy practice and with a major corporate bank, Pete has a wealth of experience and a track record of delivering first-class outcomes for clients. You can contact Pete at [email protected] or 0114 266 7141. [/author_info]

Mitigating the impact of suffering milk margins

Mitigating the impact of suffering milk margins

Mitigating the impact of suffering milk margins

Milk – the most basic of commodities – has been central to controversy in recent years, but never more so than during the summer of 2015. As the rate of milk consumptions continues to grow, British dairy farmers have seen their margins on milk fall and fall, almost simultaneously. Research has shown that dairy farmers now receive an average of 23.66p per litre of milk produced. This figure is 25% (around 7p per litre) less than they received last year.

Farmers’ averaging – good news for dairy farmers?

The sharp and dramatic fall in milk prices has put a number of UK dairy farmers under intense financial pressure. The recent extension of farmers’ averaging, from two years to five years, may now be particularly important for the dairy farming community. This extension may well help deal with, and mitigate, the impact of the ongoing fluctuations in margins and profits, and could provide farmers with invaluable tax and cash flow savings.

Cash flow is a real concern

Cash flow is undoubtedly a real concern. There are a number of opportunities available to farmers, whether it’s maximising tax reliefs, minimising tax liabilities, or even diversifying into alternative activities (which we have covered in detail) to cut their costs or bring additional revenues into the farm. However, each decision must be carefully considered. For example, by maximising one particular tax relief, you may jeopardise the long-term benefits of another.

It is therefore crucial to seek sound and proactive professional advice.

More from our agriculture experts

You can find all of our latest agriculture sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Martin Wilmott is a partner at Hawsons

Martin Wilmott acts as lead engagement partner for a wide range of corporate and non-corporate clients in the Doncaster office, especially in the Legal and professional, agricultural, transport, property and construction, manufacturing, healthcare and hospitality sectors. For more information or advice on anything covered in this article please contact Martin on [email protected] or 01302 367 262.

Over £11.4bn in R&D tax relief now claimed

Over £11.4bn in R&D tax relief now claimed

£11.4bn in R&D tax relief now claimed – are you missing out?

HMRC has now published its most recent R&D tax relief statistics (2013/14), and the picture remains very positive. The statistics show that companies – both SME and multinational alike – are continuing to claim relief on their R&D activity.

Since the introduction of the relief over 120,000 claims have now been made, amounting to over £11.4bn in tax relief claimed. Those numbers continue to grow. In total there were over 20,000 claims made in 2013/14 alone, with claims from SMEs increasing by 23%.

R&D tax relief is available to a wide variety of sectors

An important point to remember when thinking about R&D tax reliefs is that to claim this relief you don’t have to work in a lab or wear a white coat. This is one of the common misconceptions surrounding the relief, leading to many companies overlooking projects which may have qualified.

It is good to see a continuing rise in the number of R&D claims being made, particularly those from SMEs. However, there are still thousands of companies missing out.

From time to time we often hear people say that R&D tax relief only applies to certain industries, primarily the healthcare industry, or the manufacturing industry. This is not true. We have submitted successful claims for IT & software businesses, food & beverage businesses, as well as the more obvious healthcare, manufacturing and engineering businesses.

As the below table highlights, there are a large number of sectors where certain projects may qualify as R&D, so it is crucial that you speak to an advisor to maximise your tax-saving opportunities. With the government fully supporting innovative businesses across the UK, and with attractive corporation tax incentives now potentially available for many businesses, it has never been more important to consider your claims, whatever sector you operate in. In fact, the corporation tax relief could fund 46% of a company’s R&D expenditure.

The table below shows a breakdown of R&D tax relief claims by sector in 2013-14.

R&D statistics sep 20151

R&D statistics sep 20152

  • Figures exclude claims where industry sector is not known.
  • Numbers are rounded to the nearest 5 and amounts are rounded to the nearest £5m.
  • * value is less than 5

Source: Figures taken from HMRC R&D Tax Credit Statistics Report September 2015

The figures and sector spread may surprise many

Stephen Charles, tax partner at Hawsons, said: “With almost a third of all R&D claims  – equating to over £600m of relief claimed – manufacturers continue to see innovation and R&D as a top strategic priority.”

“What is perhaps surprising for many is the scope of qualifying R&D claims across a large number of industries. However, there is strong evidence that many companies are still missing out, primarily due to overlooking and thus, not claiming, potentially eligible R&D projects. Many expect R&D tax claims in manufacturing, healthcare and IT, but sometimes do not consider its applicability to other, less obvious sectors such as arts, entertainment & recreation, transport & storage and wholesale & retail.”

You can also watch a short video on R&D tax relief for small and large companies:

 

“Since the introduction of R&D tax credits the rates of relief have increased significantly and the qualifying conditions relaxed. Subsequently, more companies than ever are claiming R&D tax relief on projects, with the amount claimed now totaling £11.4bn since 2000. The consequence of missing out, particularly for smaller, innovative companies cannot be understated. Whether you’re developing a new product, service or process or materially improving an existing one, or want to learn more about this generous tax relief, regardless of your industry, it may be worth speaking with Hawsons today.”

More from our tax experts

You can find all of our latest tax articles and tax resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Stephen Charles partner

Stephen Charles is a tax partner at the firm, specialising in corporate and business taxation. For more details and advice, please contact Stephen on [email protected] or 0114 266 7141.[/author_info]