INTRODUCTION
Welcome to our Spring Newsletter!
As the days grow longer and the countryside begins to bloom, there’s a renewed sense of energy and positivity in the air, which is welcome after a turbulent six months following the autumn budget and later SFI announcements. Here, for the Albert Goodman Farms and Estates Team, spring marks the beginning of a vibrant new season—a time of year end accounts and tax planning, and ensuring our community is well placed to deliver the service expected over the coming year.
As we start our new year, we congratulate those who have been promoted including Tom Stone to Partner and who will continue to support and grow his clients and the team alongside Iain, Kate and me. Alex Westcott and Rosie Turner have been promoted to Senior Manager and Abi Pearce, Alice Barclay and Jenny Batchelor to Senior Accountants.
In this edition, we are excited to share updates from across the farms and estates finance sector, including a focus on inheritance tax and future planning, alongside seasonal reminders on ATED, P11Ds and Xero year end process tips, as well as some comments from Tom on ‘Trump’s Tariffs’.
Whilst it has been a turbulent six months for the sector, there is much to be positive about and plenty to celebrate. We are seeing many profitable farming businesses continuing to grow and diversify, through focusing on their finances and opportunities, planning ahead for future change and building resilience into their businesses.
At Albert Goodman we are here to support you, and your business so please get in touch if you have any questions.
Thank you for being part of our community. Here’s to a fruitful and inspiring spring!
SAM KIRKHAM Partner and Head of Farms & Estates Team
The purpose of the GROB rules is to therefore prevent a person from trying to reduce the value of their estate whilst at the same time benefitting from what they have given away.
To avoid being classified as a GROB, the donor must therefore relinquish all benefits associated with the property. One option, for instance, would be to pay a market value rent to continue to use the property.
CAPITAL GAINS TAX (CGT) AND GIFTS
CGT should also be considered as it can arise at the time of gifting assets, when transferring assets with capital appreciation.
1. CGT on Gifts to Individuals:
Gifting assets such as shares, property, or other chargeable assets can trigger CGT.
The gain is calculated on the difference between the asset’s original acquisition cost and its market value at the time of the gift.
The donor is responsible for paying CGT if applicable.
The annual CGT exemption (£ 3,000 for 2024/25) can be applied to reduce the taxable gain.
2. Holdover Relief for Business and Agricultural Assets:
If gifting qualifying business assets or agricultural property, holdover relief may be available to defer the CGT liability. However, there are restrictions depending on the period and part of qualifying use.
If holdover relief is claimed, the recipient inherits the original base cost, and CGT is payable when they dispose of the asset.
The CGT base cost of the asset will not be uplifted on death of the donor, even if the donor does not survive the seven-year period.
3. Gifts to Spouses and Civil Partners:
Gifts between spouses, living together, or civil partners are free from CGT.
The recipient inherits the donor’s acquisition cost, and CGT is only assessed when the recipient later disposes of the asset.
4. CGT on Gifts to Trusts:
Gifts into most trusts are treated as disposals at market value for CGT purposes.
Holdover relief may be available for certain types of trusts.
PLANNING STRATEGIES TO MINIMISE TAX LIABILITIES
To optimise tax efficiency when making gifts, consider the following:
Utilise Annual Exemptions: Use the £3,000 annual gifting exemption to reduce taxable estate value over time.
Use PETs Strategically: Plan gifts well in advance, ensuring the donor survives the seven-year period to achieve full IHT exemption. Consider life insurance if there is a risk the seven-year period may not be met. Ensure there is no reservation of benefit in the asset given away.
Gift assets currently qualifying for holdover relief which may not in the future and may appreciate in value: For example, agricultural land which may be sold for development or leased for a solar park, or an agricultural building that may be converted to a dwelling. Consider life insurance for the seven-year period and ensure there is no gift with reservation of benefit.
Consider the use of Trusts: To retain control of an asset, as Trustee, and flexibility of discretionary decision making, delaying the need to decide who should benefit, consider using a trust to enable a gift earlier to start the seven-year IHT clock. Remembering that the donor cannot benefit from the Trust and the Trust has its own IHT regime, not discussed in this article.
Regular gifts out of income: Consider making regular gifts out of income which is exempt from IHT.
Seek Professional Advice: Given the complexities of IHT and CGT, consulting with a tax specialist is advisable.
CONCLUSION
Gifting assets can be a powerful tool in estate planning, but it requires careful planning to mitigate IHT and CGT liabilities. By understanding the tax implications and making use of available reliefs and exemptions, individuals can pass on wealth efficiently while minimising their overall tax burden. Properly structured gifts can provide significant financial benefits to recipients while ensuring compliance with UK tax.
SAM KIRKHAM Farms & Estates Team sam.kirkham@albertgoodman.co.uk
STRATEGIES TO SAFEGUARD YOUR LEGACY
Inheritance tax can be a significant concern for many individuals seeking to protect their estates and ensure their loved ones receive their intended inheritance without financial burden. There are different life cover policies that can be used to mitigate these tax liabilities, offering peace of mind and financial security. In this article, we explore different types of life cover policies that can be employed to cover inheritance tax, including gift inter vivos policies for potentially exempt transfers and whole of life insurance plans.
GIFT INTER VIVOS POLICIES
Gift inter vivos policies are specifically designed to cover the inheritance tax liabilities associated with gifts made during one’s lifetime. These policies are crucial for managing potentially exempt transfers (PETs). A PET is a gift made to an individual that is only exempt from inheritance tax if the donor survives for seven years after making the gift. If the donor passes away within this period, the gift becomes taxable, and the inheritance tax liability needs to be addressed.
Gift inter vivos policies typically decrease in value over the seven-year period, reflecting the diminishing likelihood of a tax liability as the donor survives longer. This type of policy provides financial coverage to meet tax obligations if the donor does not survive the PET period, ensuring the recipient is not burdened with unexpected tax bills.
WHOLE OF LIFE INSURANCE
Whole of life insurance plans are another effective method for covering inheritance tax bills. Unlike term life insurance, which provides coverage for a specified period, whole of life insurance offers lifelong protection and guarantees a payout upon the policyholder’s death, regardless of when it occurs.
These plans can be particularly beneficial for inheritance tax planning, as they ensure that a lump sum is available to cover any tax liabilities, irrespective of the timing of the policyholder’s death. Whole of life insurance plans can be structured to align with the projected inheritance tax bill, providing a tax-free payout that can be used to pay the tax due, thereby preserving the estate for the beneficiaries.
Selecting the appropriate life cover policy to manage inheritance tax depends on individual circumstances, including the size of the estate, the value of gifts made and an individual/family’s financial plans. As this can be a complex area, it is recommended speaking with a Financial Planner to discuss the options in more detail.
REME HOLLAND Financial Planning Partner reme.holland@albertgoodman.co.uk
Share discounts and growth shares
There are often higher discounts applied to the value of shares, where a company is held in joint ownership, compared to discounts applied to shared ownership of property. This can help reduce the value chargeable in an individual’s estate. The use of freezer and growth shares can limit the future increase in value in an individual’s estate, allowing future increases to be in shares held by the next generation. This is particularly useful if the next generation is involved in the business, to incentivise them for their future input in the business.
7. No Trust ten-year charges
A company is not itself subject to the IHT regime, so there are no IHT ten year or exit charges. Instead IHT is charged on the death of the individual shareholders, which may enable both the utilisation of additional £1 million allowances but also spreading the timing of IHT over multiple individuals.
Other considerations and guidance
While incorporating assets can offer certain tax advantages, it’s crucial to consider the following:
Compliance and Administration: Operating a company entails regulatory obligations, administrative responsibilities, and associated costs.
Commercial Purpose Requirement: Like Partnerships, to qualify for BPR, the company must be engaged in genuine trading activities; investment activities typically do not qualify, unless the business is mainly trading.
Potential Future Legislative Changes: Tax laws are subject to change, and strategies effective under current legislation may be impacted by future reforms.
The Cost to Transfer the Business into a Company: It is often expensive to transfer property into a company with capital gains tax and stamp duty land tax payable, unless reliefs are available. Further, if property is gifted to the company, with the uplift in value held in other shareholders hands, this could be a chargeable lifetime disposal for IHT purposes.
Extracting cash to pay the IHT liability: where there is an IHT liability on the death of the shareholder, if cash is required out of the company to settle the liability, income tax will be payable. This could result in additional taxes which may be expensive.
Given the complexity and potential risks, it’s advisable to seek professional advice when considering the use of corporate structures. A company must be right commercially for the long-term operating of the business, and not purely for tax purposes.
Conclusion
The forthcoming changes to APR and BPR are set to alter the landscape of IHT planning significantly. For those with agricultural or business assets, exploring the use of corporate structures may offer viable avenues for mitigating IHT liabilities. However, such decisions should be made cautiously and in consultation with professionals to navigate the complexities effectively.
SAM KIRKHAM Farms & Estates Team sam.kirkham@albertgoodman.co.uk
IHT – Heritage property conditional exemption and woodlands deferral relief
IHT planning before the 2024 autumn budget typically centred around maximising Agricultural and Business Property Relief (APR and BPR). However, given the combined cap of one million for these reliefs coming into effect from April 2026 onwards, this article looks at what unlimited deferral reliefs could also be available. This is a high-level appraisal of other reliefs, which are inherently technical so please contact us if you would like to discuss your situation in detail.
Conditional Exemption for Heritage Assets
Pre-eminent land, property and chattels (most commonly works of art) can all qualify for Heritage Property Relief from IHT and capital gains tax (CGT). The reliefs, also known as conditional exemption, encourages private owners to retain, preserve, and make available for public viewing and benefit, items of national heritage.
Provided assurances are given by the owner regarding preservation and public access, and the property or assets are not sold to a private party unwilling to continue the undertakings, then the property remains exempt from IHT.
To qualify for relief the asset(s) must be one of the following (taken from HMRC guidance);
buildings, estates or parklands of outstanding historical or architectural interest
land of outstanding natural beauty and spectacular views
land of outstanding scientific interest including special areas for the conservation of wildlife, plants and trees
objects with national scientific, historic or artistic interest, either in their own right or due to a connection with historical buildings
HMRC consult with relevant advisory bodies, for example Natural England or historic bodies before determining whether assets qualify.
The conditional exemption can apply to transfers during lifetime, for example property settled into trust, and on death. Where a property transferred during lifetime, as a potentially exempt transfer (PET), becomes chargeable to IHT within 7 years an exemption claim will also be needed.
Maintenance Funds
Where assets are designated under the heritage exemption it is possible to establish a trust maintenance fund to generate income used to maintain the heritage property. The maintenance fund receives favourable IHT treatment despite the income generating assets within the maintenance fund not being heritage exempt in their own right.
Woodlands Relief
The value of growing timber in a deceased estate can be deferred until sale by making an election for Woodlands Relief. The value of land where the trees are growing remains immediately chargeable. Woodlands Relief is only available on death.
The relief only defers the tax, as the value of the timber is chargeable to IHT when the timber is sold/disposed of.
Example: An elderly landowner dies in May 2026 leaving a net estate of £5,500,000, comprising:
Let Agricultural land worth £2,000,000, on a post 1995 tenancy, qualifying for 100% APR.
In-hand farm and business assets (including stock and machinery) worth £2,500,000 qualifying for BPR.
A farmhouse worth £500,000. The farmhouse was occupied until death, it is characteristically a farmhouse and is surrounded by the land farmed in-hand. It is expected to qualify for APR.
Commercial woodland worth £500,000 (£200,000 being the land value and £300,000 the timber value).
The landowner was not married, had no children and left their entire estate to their nephew.
The IHT due without a claim for woodlands relief under the new APR/BPR cap would be;
Less: Nil Rate Bank (NRB) (£325,000)
Chargeable Estate: £1,925,000
IHT @ 40% £770,000
In the same scenario, if Woodlands Relief is claimed on the value of the timber the IHT reduces to £710,000. This is a £60,000 deferral only.
In the future if the timber is sold, having increased in value to £500,000, then IHT at 40% will become due on the net timber sale proceeds. For example, if after felling costs, sales commissions and replanting expenses the net timber sale proceeds are £350,000 then IHT of £140,000 would become due.
The cashflow saving of £60,000, being 20% IHT, in the deceased estate has quickly become overshadowed by a full 40% IHT bill later when the woodland is sold.
In deciding whether woodlands relief is claimed it is important to weigh up the relative advantages and disadvantages. Hence where possible 100% BPR has historically been favoured over Woodlands Relief.
ANNUAL TAX ON ENVELOPED DWELLINGS
(ATED)… the tax on residential property
ATED is a tax on the ownership of a chargeable interest in residential property in the UK by a non-natural person (NNP). A NNP can be a company or a partnership with a corporate partner.
VALUATION OF PROPERTIES
If a NNP holds an interest in a residential property, whether freehold or leasehold, and the property is valued at more than £500,000 at 1 April 2022, (or if acquired after this date cost more than £500,000), then a return is needed, whether or not any tax is due.
If you think that this applies to you, then please contact us.
CHARGEABLE PERIODS AND VALUATIONS
Chargeable periods for ATED run from 1 April to 31 March, so the next return due will be for the year ended 31 March 2026. However, the main return is made in advance, so must be filed by 30 April 2025, only 30 days after the start of the chargeable period. Any ATED charges must be paid at the same time as the returns are filed.
If you acquire a property during the chargeable period, you have 30 days to file the return following completion.
The charge will depend on where the valuation/cost sits within the following bandings:
a property developer. In some circumstances, relief is also available for qualifying properties open to the general public or properties occupied by certain employees/partners, as well as farmhouses/cottages occupied by qualifying farm workers.
FARMHOUSE RELIEF
Relief is available to a director/qualifying farm worker if they live in a farmhouse/cottage owned by a NNP if they meet the following conditions:
1. The property must form part of the land occupied for the farming trade – the trade must be carried out commercially.
2. The property is occupied by the farmworker for the purposes of the trade. They must have substantial involvement with the day to day running of the farm. HMRC suggest that the person must work at least 20 hours on average, per week on the farm.
If a NNP wants to claim one of the reliefs, it has to file a return to do so.
Some reliefs are not available when there is, or has been, a non-qualifying individual (NQI) in occupation. An NQI is broadly anyone connected with the NNP.
PENALTIES
Failure to file correctly or on time, or to pay on time, will lead to penalties and interest charges, even where there is no tax due. For example, if a return should have been filed by 30 April 2025 and is not filed until 1 May 2026, a penalty of up to £1,600 could be charged, even if there was no tax to pay.
The rules are complex and, if incorrectly applied, can easily result in interest and penalty charges being levied.
If you are concerned that your NNP may be subject to the ATED regime then please contact us.
AVAILABLE RELIEFS
Whilst there are many reliefs available which may reduce the charge to nil, the relief rules are complex. Reliefs include properties used in commercially run property letting businesses or properties held as part of the trading stock of
ISOBELSTEPHENSON TaxManager isobel.stephenson@albertgoodman.co.uk
INHERITANCE TAX ON TRUSTS
HMRC have now released their consultation document on the proposed changes announced last year in the Autumn Budget.
This article covers the proposed changes set out in the 2024 Budget and the further information we now know from the consultation document.
Relief for Business Property Relief (BPR) and Agricultural Property Relief (APR)
From April 2026 there are restrictions on BPR and APR relief for Trustees.
Currently, trust assets which qualify for 100% relief, escape any inheritance tax (IHT) charge on the trusts ten-year charge and on any proportionate/exit charges (which arise when capital distributions are made from the trust).
From 6 April 2026, each existing trust in place on budget day (30th October 2024) will have its own £1m allowance. This means that assets qualifying for 100% BPR or APR, will qualify for relief up to £1m. Any value in excess of £1m will only qualify for 50% relief. Trustees who have previously escaped IHT liabilities may now find themselves with an IHT charge on the first ten-year anniversary following 6 April 2026 and any exit charges thereafter. As a reminder, the rate of tax at a ten-year charge is a maximum of 6%.
Where the existing 100% relief applied, this relief will still be applied in full for assets within the £1m allowance, except for shares designated as not listed on the markets of recognised stock exchanges such as AIM, where the relief will be reduced to 50% and will not be affected by the new allowance. This change also comes into effect from April 2026.
10-Year charges
For 10- year charges on pre-budget trusts arising before 6th April 2026, the old rules will remain, i.e. there will be no restriction to the relief of APR and BPR. For 10-year charges arising post 6th April 2026, the proposed calculations will deduct the full £1m to calculate a tax rate and then this tax rate is adjusted for the period arising prior to 6th April 2026. The consultation includes case studies but these are limited, so it is not yet clear how calculations for trusts with mixed assets (BPR/APR and non BPR/APR) will work.
Exit charges
For the calculation of exit charges, there is also a planned change. The calculation of IHT charges within a trust are complex but essentially, the current position for any exit charges in the first ten-years of a trust, the rate to be applied is recalculated without the reference to BPR/APR property. Essentially this means that trusts created with BPR/APR assets, which then lose their IHT relief status prior to an exit, could not be distributed from the trust IHT free. This differs to the way exit charges are calculated after the first ten years. Exits after the first ten-year charge are calculated with reference to the tax % applied at the previous ten-year charge. This would mean that if at the ten-charge there was full relief to IHT and 0% was charged on the trust, any exit arising in the following 10 years would be taxed at 0% (regardless of whether the asset qualified or not).
The change being proposed is that all exits from a trust will be subject to a recalculation of the rate to be used at the time of the exit, ignoring BPR/APR. This removes some current planning opportunities when trusts are wound up perhaps after the sale of a company.
If the trustees use part of the £1m allowance on an exit, the amount available on the 10-year charge will be reduced accordingly.
IHT on some assets qualify for the instalment option and interest free for all assets qualifying for 100% and 50% BPR/ APR. It will be interesting to see how the already stretched trust team at HMRC will deal with complex calculations.
New Trusts
For new trusts being set up post Budget Day, the Government intends to introduce rules to ensure that the allowance is divided between trusts where a settlor sets up multiple trusts on or after 30 October 2024.
HMRC propose that this £1m allowance will be utilised in chronological order. If a settlor sets up a trust with BPR/ APR assets with a value of £750k post 30th October 2024, that trust will have £750k of a BPR/APR allowance for future ten-year charges and exit charges.
If a second trust is set up with a further £750k of BPR/APR property, that trust will have the remaining £250k of the BPR/APR allowance.
The settlors £1m allowance will refresh each 7 years in the same way the nil rate band of £325k refreshes.
Life interest Trusts
For life interest trusts where the assets fall within the life tenant’s estate (and not within the relevant property regime) there will also be a restriction of BPR/APR. In the same way that there is £1m allowance for trustees, the same applies to an individual. Any IHT due arising on the death of the life tenant is borne by the trustees from the assets held so consideration will need to be given as to how this tax liability is funded.
The £1m allowance on death will be pro-rated between the deceased’s own free estate and the assets within a life interest trust. The £1m allowance is not transferable to a surviving spouse unlike the nil rate bands.
Related Property Rules
It has been proposed that the related property rules are extended to include trusts set up by the same settlor when looking at values to be used in an IHT calculation.
Currently these rules are designed to prevent minority discounts being applied to the value of an individual’s holding in an asset where for example the individual’s spouse also holds the same asset.
Currently, if you had 10 trusts all holding a 10% share in a company, for IHT purposes the value of each trust will be 10% of the full company value less a minority discount of perhaps 70% giving a much lower value for any ten-year charge or exit charge.
The proposal is that trusts set up by the same settlor will be “related” meaning that any minority discount in the example above will not be available and instead any discount will be based on the holding of all trusts set up by the same settlor.
Other announcements
For trusts which are created from Estates of parents for 18–25-year-old beneficiaries, these trusts will have a £1m allowance for each beneficiary. This is so that younger beneficiaries are not disadvantaged by older siblings who take their inheritance first.
Existing trusts will need to be reviewed so that the trustees can plan accordingly. However, the new rules are not yet known so trustees should not be too hasty in making decisions at this stage.
RUTH POWELL Tax Director ruth.powell@albertgoodman.co.uk
MAKING TAX DIGITAL FOR INCOME TAX (MTD IT)
HMRC will be writing to customers in April 2025 whose 2023-24 Self-Assessment tax return shows combined income from property and sole trade businesses close to, or over, £50,000. The letter will let those customers know that, depending on their income in 2024-25, they may need to sign up and use Making Tax Digital for Income Tax from 6 April 2026. This requires an individual to maintain digital records and submit quarterly tax returns.
“The income threshold will be dropping over the coming years and it was announced in the Spring Statement that this will be reducing to £20,000 by April 2028”.
We will keep you updated and provide more support as we move closer to this date. However, if you have any immediate questions or concerns, please get in touch.
CHARLIE GREEN Farms & Estates Team charlie.green@albertgoodman.co.uk
A farming year – what a ride!!
The 2024/25 farming year may well be remembered as the year of stormy weather and a topsy turvy political landscape. The change of Government and the subsequent fall out from Labour’s first budget has created challenges for farmers. The increase in bank interest rates has also squeezed cashflow for many businesses.
Finding and keeping the labour needed to manage businesses has also been a struggle. The increase in minimum wage and employers’ national insurance from April 2025 will need careful management, potentially through changes to hours worked, more benefits, or investing in improved facilities to ensure a more efficient and motivated workforce.
Dairy prices have strengthened recently. The average farmgate milk price was 37.21 pence per litre in April 2024 and now most conventional milk prices are in the mid to high 40s, so an increase of around 10 pence per litre. Conventional concentrate prices are down about £20 per tonne year on year.
Beef prices have seen market records being broken almost every week. The average price per kilo deadweight has increased to over £6.30, with the top prices being over £7 per kilo. This is an increase of around 20% year on year. With no sign of supply meeting demand in the short-term, prices should remain buoyant.
Sheep prices have increased about 50 pence per kilo deadweight to around £7.40 per kilo. Imports of sheep meat increased 37% in 2024 because of reduced UK production and the record prices being seen.
Arable prices have remained low with future feed wheat for late 2026 / early 2027 being around £200 per tonne. Low prices, the drop in Basic Payment Scheme for 2025 and wet weather has led to difficult decisions on land usage for the coming year.
Poultry meat prices have increased nearly to the all-time high of £8.60 per kilo, which was back in September 2021. This coupled with lower feed prices has meant that good margins have been seen across the sector. Egg prices have increased
by around 6% year on year to just over £1.45 per dozen.
james.bryant@albertgoodman.co.uk
Pork has remained around £2 per kilo, down slightly on last year. Costs of production have been around £1.90 per kilo, so a 100kg pig would give a margin of around £10, leaving very little profit. Feed makes up around 60% of the total costs of production so any changes in feed prices have a large impact on profit.
Machinery costs have also increased. With a mid- powered tractor now costing more than £100,000, decisions need to be made on whether to replace machinery or keep for longer. With repair bills also increasing, once warranties run out the risk of a costly repair bill will increase. Using contractors more often may be a solution for some but with the changes in weather there are smaller windows of opportunity to get the work completed at the right time.
Actions to consider:
Ensure that you have a detailed monthly cashflows, for at least the next year ahead.
Review this with your team of professionals and discuss ways to manage this.
See if there are ways to spread costs or boost income to smooth out any expensive periods.
Early conversations with your bank manager should give you time to make the right business decisions and not be forced into doing things at the wrong time.
In summary, whilst prices have increased across most sectors, excluding arable, there is very little margin for error and the management of your business is paramount to ensuring a prosperous future.
JAMES BRYANT
Farms & Estates Team
HOW COULD TRUMPS TARIFFS impact UK farming businesses?
At the time of writing the Trump administration has just outlined tariffs to the World. The UK has had a 10%tariffimposed,whilsttheEUhashada20%tariff imposedonthem.
In recent times these tariffs have been used as a negotiating tool for border security. Generally, these tariffs have been introduced to protect US domestic industries, reduce their trade deficit, and retaliate againstothercountries’foreignpolicies.
ForUKagriculture,theUSisakeytradingpartnerand the third largest export market. The Prime Minister hasrecentlyreturnedfromtheUSwithdiscussionson thetableonapotentialfreetradedeal.
Whilstonthesurfacefreetradesoundsfantastic,itis unlikelythatthiswouldbeawide-reachingagreement, and it will instead focus on specific sectors like technologyandhumansciences. Thescarythoughtfor agriculture is that a deal for the above sectors could come at the expense of agriculture, if for example, chlorinatedchickenwasmadelegalandallowedinto theUKasaresult.
Whatdoesdirecttariffsonagriculturalexportsmean?
IftheUSwastoimposetariffsonagriculturalimports to the US, this would have serious consequences for Britishfarmers.
If tariffs are imposed British exports would become moreexpensivecomparedtoUSdomesticproducts.
This could have the result of reducing demand from theUK,asUSconsumersnolongerwanttheproduct orhavetheimpactofforcingUKproducerstoabsorb the cost. The likely impact of the latter would be a reduction in farmgate prices.
If demand reduces, there will likely be surplus supply which again could flood the UK domestic market and result in farmgate prices again reducing.
The impact could vary depending on the sector. For example, high end cheese may not see a change in demand and this additional cost may be absorbed by the US consumer, whereas lamb or other meat products may see the above.
What are the wider implications of tariffs around the world on UK agriculture?
Tariffs around the world could cause farming businesses could see some of the following impacts:
1. Supply chain disruptions
Tariffs often cause disruption of key goods like steel. This would cause issues to businesses completing projects and/or expanding like we saw during the covid lockdown periods.
2. Negative currency and inflations effects
Trade barriers could weaken the pound against the dollar. This would have the impact of making imports more expensive as most are completed in dollars. This would drive inflation in the UK and likely cause interest rates to remain higher for longer.
This would likely put squeezes on cashflow and reduce farm profitability.
Overall, the impact of tariffs either directly or indirectly will be negative on the overall economy and, both short and long term, this will hurt UK farming. It is key in this turbulent time you continue to review your exposure to risk and explore how to mitigate it. We need to try and build resilience in our businesses to weather the impact of these changes.
TOM STONE
Farms & Estates Team
tom.stone@albertgoodman.co.uk
XERO YEAR-END PROCESSES
At the time of writing, we are approaching the year end for many clients. I have therefore listed below the key areas to check before sending us your data, along with a list of the more general information that we require.
Although tailored to Xero, the main points will be applicable to all year-end processes.
1. Bank reconciliations – please ensure that all bank transactions are reconciled for the year and the balance shown in your software agrees with the statement balance. In Xero go to Bank account > Vertical ellipsis >Reconciliation report > change date to ‘last financial year’. The Statement balance (calculated) at the bottom should agree with your bank statement.
2. VAT return – please ensure that you have submitted your VAT return for the period covering your year-end and, if additional workings are used, please provide these.
3. Mis-postings & duplicates – please check for any mispostings or duplicated invoices by running an ‘account transactions’ report in Xero. Accounting > Reports > Account transactions > select your accounting period in date range. Mis-postings can be corrected by clicking into the transaction and amending or using the ‘find and recode’ function.
4. Debtors (amounts owed to you) – please check these are correct by running the ‘Aged Receivables Detailed’ report under Accounting> Reports. Ensure you have selected the date as your year-end date. The report should show outstanding sales invoices that are within your year-end but not received until after your year-end.
5. Creditors (amounts you owe to suppliers) – please check these are correct by running the ‘Aged Payables Detailed’ report under Accounting> Reports. Ensure
you have selected the date as your year-end date. The report should show outstanding bills that are within your year-end but not paid until after your year-end.
Information required for accounts preparation
We also require the following where applicable:
Bank statements and loan statements showing the balance at the year end
Details of livestock and deadstock held on farm at the year end
HP agreements for any new agreements taken out in the year
Notes – please do provide additional notes to highlight any significant changes from last year or anything else that you feel would be useful for us to know
Personal tax return information – where possible we aim to prepare your personal tax returns alongside the accounts so, please also include this information.
This is by no means an exhaustive list, but I hope it helps provide some structure to the yearend process and the information we require.
LINDSEY JOHNSON Farms & Estates Team lindsey.johnson@albertgoodman.co.uk