Harry Edwards (Gloucester)

With the mad rush to file self employed and partnership tax returns by the 31^st January it is now time to plan for future tax and rule changes.  To minimise your tax liability seems the prudent thing to do, but sometimes what may be most suitable for the business is not go and spend money on a new tractor or put some new concrete down just to save some tax.  

Is the investment needed on farm, will it either provide a financial return or increase productivity or workflow on farm.  Critically would you make that investment if there was no tax advantage?  If the answer is no to any of these it is worth taking the time to really understand the benefits of making such an investment.  Would the business be better placed to pay the tax that is due and retain the cash within the business in times of uncertainty?  Especially if there may be greater opportunities for progressive businesses in periods of change.

HMRC have announced changes to the way profits for self-employed businesses are calculated.  From 2024 all self-employed or members of a partnership will be taxed on actual profit within the tax year rather than profits from a set of accounts ending in that tax year.  Many businesses have year ends throughout the year so anyone who does not have a year-end between 31^st March and 5^th April, will experience a change to how tax is calculated and may result in an overpay in tax in that first year.  You can continue to have your current accounting year end but the profit will be based on a pro rata basis and therefore straddle two sets of accounts.

For further information on how this change may impact your business, please contact Harry at harryedwards@fcgagric.com or your accountant.