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Speaking to an accountant during the week, he had a couple of pieces of advice for dairy farmers.
Firstly, he said you need to find out what your tax liability will be for 2017. This is what will be paid in October 2018.
Send in details of all lodgements and costs incurred during this year to your accountant for preliminary accounts. After a good year of trading, he expects tax bills will be well up.
The fear is that if 2018 is not as good, then the cash to pay the tax might be scarce in 12 months’ time.
The best policy is to set up a separate bank account and lodge what you need for tax and a rainy-day fund into this account. Keep this account out of reach of the current account or else it will be swallowed up.
There is no easy way to avoid paying tax.
Forward-buying inputs will have a negligible impact on this year’s tax bill for those on income averaging.
On succession and transfers, he says that the best time to start the conversation with the accountant and solicitor is three or four years before the time you plan to transfer the farm.
Stamp duty, allowances and reliefs are a minefield so get good advice well in advance. Money spent on good advice in this area is money well spent.
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