Agriculture update for UK farmers – October 2015

Agriculture update for UK farmers – October 2015

Agriculture update for UK farmers – October 2015

Welcome to our second 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.

Increasing input costs as National Minimum Wage rises

From the 1 October 2015, the UK National Minimum Wage increased.

The new rates are:

  • £6:70
  • £5:30
  • £3:87
  • £3:30

Could Defra be disbanded in new government cuts?

There are rumours abound that Defra could be disbanded in the latest round of government cuts, with confirmation set to be announced in late November. Prior to the General Election there were similar rumours surrounding the future of Defra; however, this time, the rumours are said to be more serious as the government plans more severe spending cuts.

Although the future of Defra and farming policy is still unclear, initial thoughts are that a disbanded Defra could see farming policy made the responsibility of the Department for Business. We wait further news and confirmation on this.

Is there a very real crisis concern in UK farming?

The Prince of Wales attended a farm crisis meeting with key figures in the farming and rural sector in Derbyshire on 23 October convened by his Countryside Fund Charity. Clarence House said it would “explore the immediate actions and commitments that are needed to avert a major crisis…over the winter.”

Concerns have been expressed about the future of many UK farm businesses due to low commodity prices, erratic weather conditions and potential delays in support payments. Claire Saunders, Director of the Fund, said: “By fostering a greater understanding of the challenges facing farming we will go some way to help to solve them.”

Other agriculture news…

  • Fertiliser prices are falling as fuel prices reduce. Farm input costs were 2.86% lower in the year to September according to the buyer group.
  • The RPA have said that the “vast majority” of 2015 direct payments will be received by 31 January 2016.
  • Machinery sales have fallen significantly between 2013 and 2015. Agco have fallen 30.8% CNH 44.8% and Deere 33.0%. Manufacturers have reduced production levels accordingly.
  • Defra’s June 2015 census figures show that the UK’s area of uncropped arable land rose by more than 20% this year. Greening is thought to account for most of this increase.
  • Wheat prices have rallied following delays in drilling in the Black Sea region. Feed wheat price rose £5.30 per tonne and milling wheat increased by £5.90 per tonne. The 2015 UK wheat crop may be 16.1 million tonnes, which would make it the second largest crop for 5 years (there is also 3 million tonnes from last year too).  UK arable farmers must therefore ensure that wheat pricing is competitive.
  • CLA has scrapped the loss-making Game Fair which was due to be held at Ragely Hall from 29 July 2016.
  • The Rural Development Programme “LEADER” funding programme has £138m available to assist in creating jobs and helping diversification projects for rural communities across the UK. There are 80 local action groups to which applications can be made and details are on the Defra website.
  • Pig prices have fallen to a 7 year low. The EU spec standard pig price dropped to 127.84p/kg last week, the lowest since June 2008.
  • The UK grain market has come under pressure this week as the strengthening pound has reduced the competitiveness of UK exports.

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.

Government opens Patent Box Tax Relief consultation

Government opens Patent Box Tax Relief consultation

Government opens Patent Box Tax Relief consultation 

On 1 April 2013 the UK government introduced the Patent Box Tax regime which aims to provide tax breaks for companies which commercialise patents or develop new innovative patented products, processes or services.

The regime works by assigning a lower rate of tax to worldwide profits earned by UK companies which are attributable to patents granted in the UK or Europe. The relief is being phased in over 5 years so that by 2017/18 the effective rate of tax on patent box profits will be just 10 percent.

Patent Box Tax Relief consultation

Changes have been proposed to the Patent Box regime in order to comply with a new international framework for Intellectual Property taxation which has been developed by the OECD. This is intended to harmonise the various preferential tax regimes that operate within the G20 member countries. A key principle underlying this project is that taxing rights over profits should be aligned with the economic activity that generates them. The government opened a Patent Box Tax Relief consultation with regards to these proposed changes on 22 October 2015.

Proposed changes to the eligibility criteria

The basis of the proposed changes is that eligibility to claim Patent Box Tax Relief should be based on whether the R&D that led to the development of the IP has been carried out in the UK or not. This principle is to be implemented through a ratio, called the “nexus fraction”, which is the proportion of the profit that can be included in the patent box. Broadly, this fraction will be based on the level of R&D carried out by the company in the UK.

The calculation of IP profits

Another area covered by the consultation is whether the calculation of IP profits subject to the patent box regime should be calculated using a proportionate split or whether IP profits related to each patent should streamed in every case.

A proportionate split is currently the default approach but it is possible to elect to use a streaming calculation. Streaming can be beneficial but can add further complexities in terms of accounting. If streaming becomes compulsory companies will need to make sure they have adequate systems in place in order to calculate profits arising from each patent.

If companies are concerned about these proposals and what the outcome of the Patent Box Tax Relief consultation will mean for them they should make their representations to HMRC by 4 December 2015.

If your company is involved in developing innovative products or processes you may be able to benefit from the Patent Box and/or Research and Development Tax Relief.

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.

Aaron Hemmington

Aaron Hemmington is a Tax Manager based in the Northampton office and specialises in providing tax planning, advisory and compliance services to owner managed businesses across a variety of sectors. For more details and advice, please contact Aaron on [email protected] or 01604 645 600. You can also follow Aaron on LinkedIn. [/author_info]

Electrification U-turn and its impact on the rail sector

Electrification U-turn and its impact on the rail sector

Electrification and modernisation plans re-commenced

On, off, on…

Just weeks after the General Election, the rail sector was dealt a devastating blow when the government ‘paused’ promised upgrades to major rail lines in the Midlands and the North of England. There were serious concerns over the future of inward investment and business confidence following the pause.

Peter Kennan, a Partner at Hawsons, who also Chairs Sheffield Chamber of Commerce Transport Forum, appeared on BBC and ITV news programmes back in June to express the disappointment felt by Sheffield City Region businesses following the announcement.

Major delays as new completion dates announced

However, the good news is that Network Rail is set to restart electrification of train lines and move forward with their plans. Secretary of State for Transport, Patrick Mcloughlin, has reversed his June suspension and has now pressed for urgency on these two important electrification schemes. This could mean wires across the Pennines by 2020, and wires reaching Sheffield from London by 2023. This is somewhat behind the original proposed completion dates of 2019, but is good news nevertheless. There is also good news for the Midlands as electrification of the line north of Bedford to Kettering and Corby will now be completed by 2019.

Speaking to the Sheffield Star about the announcement of the recommencement Peter Kennan said “We are delighted to welcome the news that the electrification of the Midland Mainline will resume and we will hopefully have electric trains from Sheffield to London by 2023.”

“A modern, efficient and environmentally friendly rail service to London is a key objective for our city business region. While noting some of the comments made following the announcement, work has to progress in stages from the present limit of electrification in Bedford, and Sheffield is at the extremity of the line. It is actually a big relief that the whole line will be electrified in due course and we feel the delay, although regrettable, is understandable.”

Electrification and the impact on business

Paul Wormald, Transport & Logistics Partner, said: “Whilst this recommencement is welcome news, the lack of detailed costing and implementation plans remains a concern, particularly in the light of delays and cost overruns on current electrification projects. One hopes that the Department for Transport and National Rail follow-up and deliver these projects which are absolutely critical for business growth in the Midlands and North of England.”

“Further plans for electrification and investment in modernisation will bring both opportunities and challenges for businesses involved in the rail industry, and across the Sheffield City Region and Midlands as a whole. For now, the long-term impact of such considerable changes is unknown, but it is essential that firms involved in the rail sector understand, and plan for, the likely business implications.”

More from our transport and logistics experts

You can find all of our latest transport and logistics 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.

Paul Wormald is a partner at Hawsons, working in the Doncaster office. He worked previously with two national firms of Chartered Accountants prior to joining Hawsons in 2001. For more information or advice on anything covered in this article, please contact Paul on [email protected] or 01302 367 262.[/author_info]

SME tax corner – the good, the bad & the PAYE!

SME tax corner – the good, the bad & the PAYE!

Welcome to our third edition of the SME tax corner.

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

Good: Minimising tax by spreading income around the family

Owner-managed companies often seek to minimise the tax position of shareholder-directors by involving members of the same family and using personal reliefs and lower rate tax bands of each person. Have you considered minimising tax by spreading income around the family?

This can be a particularly tax effective remuneration strategy, helping you to legally minimise your tax liabilities…but there are a number of key details and potential risks that you must consider. Find out more here.

Bad: More tax changes on the way for smaller businesses?

With the Autumn Statement now just a month away (25 November 2015) there is concern amongst the small business community of what further changes lie ahead.

The Federation of Small Businesses (FSB) recently published the latest findings from its Small Business Index (SMI), with the findings indicating that small businesses appear cautious about their economic prospects. Following the recent changes announced in the Summer Budget – most notably the introduction of the National Living Wage – it is perhaps unsurprising that the optimism of small business owners is slightly more tentative than it was six months ago.

That being said, as we mentioned in our small business outlook 2015/16, the picture is largely positive for the smaller business. The UK economy thrives on small businesses and, generally speaking, they are performing well regionally and internationally. In fact, a recent report found that SMEs were growing at their fastest rate since the economic downturn in 2008.

We now wait and see what next month’s Autumn Statement brings for small businesses.

PAYE:  Are you aware of the forthcoming PAYE changes?

Some of the recent tax changes for small businesses will likely have an impact on PAYE. The changes include the introduction of the National Living Wage, changes in Employment Allowance, the new Scottish rate of income tax and the abolition of Employers’ NI contributions for apprentices.

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 succession planning for GPs a top strategic priority?

Is succession planning for GPs a top strategic priority?

Is succession planning for GPs a very real concern in the UK?

Over recent years there has been a strong focus in the media and the national press on the recruitment crisis in the GP workforce. The primary focal point of many reports has been on the lack of new GPs entering the sector, as there has been, and still is, a shortfall of junior doctors wanting to become GPs. In 2013, only 20% of medical students across the UK chose to work in general practice once they had completed their foundation training, 30% below the national target of 50% by 2016.

Jeremy Hunt, Health Secretary, unveiled his ‘new deal’ for GPs on 19 June 2015, promising to pledge additional funds in an attempt to take urgent action in addressing the shortage of GPs.

The ‘new deal’, however, was met with scrutiny across the profession because of a lack of detail and clarification over implementation. Now, with too few younger medics wanting to enter the sector and so many doctors close to retirement age, or expecting to retire before the age of 60, the Royal College of General Practitioners (RCGP) has warned that more than 500 practices are under threat of closure. Is succession becoming a real concern for GP practices?

Many GPs are set to leave in sector in the next 5 years

A recent study by the BBC, involving 1,005 GPs across the UK, revealed that 56% of doctors expect to retire or leave general practice before the age of 60, despite a £10m plan to attempt to encourage more GPs to delay or come back from retirement.

The results of the report are summarised below, with percentages rounded:

  • 25% of GPs definitely leaving the service before 60
  • 30% will probably leave
  • 32% probably not leaving
  • 6% definitely not leaving
  • 6% don’t know

The average GP retires at 59, so these results are not necessarily a surprise. What is worrying, however, is that in some parts of the UK 1 in 4 family doctors are over the age of 55 – and there are currently at least 10,000 family doctors aged 55 or over across the nation.

Is GP succession a top strategic priority?

With so many GP practices likely to be transitioning to the next generation over the next 2 to 5 years, succession planning for GPs is certainly a central management issue for many involved in the sector.

Scott Sanderson, Healthcare Partner at Hawsons, said: “As many GP practices are experiencing or are set to experience partner changes in the near future it is worrying that, in our experience, the process is often not optimally prepared for. Transition plans are rarely in place or are often overly ambitious when they are – failing to give a long enough lead time for successor partners. Research has highlighted what is a major concern for many practices across the UK, and with the number of GPs leaving the sector, to retire or pursue another profession, continuing to outnumber the new entrants coming in; this really is a central management issue for many practices.”

A trend to more salaried GPs – a changing tradition?

“The lack of successors is also a particularly important point when it comes to succession planning for GPs. Previously; it was often assumed that the next generation would want to become partners. However, the profession has changed significantly and an individual’s work-life-balance is becoming an increasingly important part of working in a practice. As such, we have seen a trend in the number of salaried GPs rising in recent years, and the number of GP partners continually falling. The number of salaried/other GPs shows an increase of 7,441 between 2003 and 2013. This is a noteworthy increase of 434.6%, rising from 1,712 to 9,153 in 10 years. This again further highlights the continuing tendency to work in in the profession as a salaried GP rather than as a partner, particularly since the introduction of the new GP contract in April 2004. This has huge implications on succession planning for GPs.”

“With so many family doctors across the UK approaching retirement age – including 90% of GPs in some practices – the next 2 to 5 years promises to be eventual for all involved in the sector. It is therefore vital that GP practices across the UK recognise the need for succession planning and determine over what time-frame the issue will arise.”

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Considerations for new partners joining

There are a number of considerations that need to be addressed when a new partner joins the practice, including informing the Local Area Team, signing a partnership agreement and maybe, if the partner has two years’ experience, applying for seniority. In an article we wrote in the beginning of 2015, we looked at a number of a key action points that need to be considered for new GP partners joining.

More from our GP practice experts

You can find all of our latest GP practice 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.

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]