It’s been a challenging time.
The agricultural sector is the backbone of our economy, driving food security, employment, and rural development. However, managing a farming business comes with unique financial challenges and complexities.
Bevan Buckland LLP works with farming clients of all sizes. Alun Evans, Partner at our Haverfordwest office, explains why excellent financial practices are essential for the sustainability and growth of any farm and how we can help those operating in the agricultural sector.
Here’s how we can help and support your agriculture business:
1.Making Tax Digital
Most farms now operate computerised accounting software to record basic transactions needed for VAT reporting and day-to-day accounting. However, a new change to the tax reporting system is on the horizon – Making Tax Digital for Income Tax [MTDT]. This tax reporting system will impact farm businesses dependent on their trading structure as follows:
Sole trade farmers
From April 2026, self-employed farmers with sales of more than £50,000 will be required (mandated) to keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software.
those with an income of between £30,000 and up to £50,000 will need to do this from April 2027
Farm partnerships
For partnerships – MDTT will start at a later date to be confirmed, but this will be after 2026 at the earliest
Companies
Will be exempt from MTDT until 2026 at the earliest.
There may be many announcements before MDTT is finally introduced. We can be sceptical of the advantages that this brings to HMRC, but we cannot prevent it from being implemented. At Bevan Buckland, we are already planning for this major shake-up in the tax system and are happy to advise farming clients on how to prepare for its introduction.
2. Management accounts
We regularly prepare farm management accounts to assist businesses in assessing their tax position before the financial year ends. This allows business owners to make decisions on capital expenditures if required, before the year ends to minimise their tax liability.
3. Capital allowances
We advise on not only claiming capital allowances on machinery purchases but also on other allowances that are available on non-machinery capital expenditure:
The structural building allowance allows you to claim 3% per annum on a straight-line basis for constructing new sheds and buildings.
Integral features. This allows us to claim increased allowances for items that are integral to the construction, e.g., electrical and heating systems. These are usually obvious and can be identified from suppliers’ invoices, but in high-value projects such as new dairy parlours, we may recommend a specialist capital allowance firm undertake a survey to quantify a detailed claim.
4. Trading structure
We regularly advise on the allocation of profits in partnerships to minimise the tax liability for the family as a whole. We may recommend farms convert to a company, although at present, the tax advantages of incorporation are minimal. Unfortunately, this is subject to the whim of incumbent governments, who both introduce advantages and then subsequently remove them. We always monitor the most tax-efficient structure for clients.
5. Partnership agreements
For family farms, we can assist with straightforward partnership agreements that can set the ground rules for the partnership’s governance. We can work closely with the legal advisers for more significant, more complex partnerships to produce a tax-efficient agreement. In most cases, partnerships are usually left and can be forgotten, but they can be very useful if contentious issues arise in the future. They also prioritize wills and so tie in with inheritance tax planning.
6. Inheritance tax (IHT) planning
Agricultural land and property have, generally, been exempt from IHT for the last 40 years. However, with a change in government, this valuable relief is now up in the air. An autumn Budget is being presented by the new Chancellor, Rachel Reeves, on 30 October. There is a window of opportunity for farmers to transfer land to their successors at that time. However, careful planning is needed. One also has to remember that the Blair government was in power from 1997 to 2010 and did not disturb the reliefs that were introduced by Margaret Thatcher in 1986.
This is a case of watching this space, but if you are concerned, please contact your usual contact to discuss further.
7. Probate
Alun is licensed to provide probate services in noncontentious cases. This can often prove useful, as we have details of financial assets on our files, and it assists with an efficient probate application.
Partnering with Bevan Buckland LLP for Agricultural Success and Growth
At Bevan Buckland LLP, we understand the unique challenges and opportunities in the agricultural sector.
We are committed to providing the expertise and support you need to succeed financially. Whether you are a small family farm or a large agri-business, we have the knowledge and experience to help you grow and prosper.
If you require support, please call us on 01437 760666 or email alun.evans@bevanbuckland.co.uk to learn how we can help you and your business.
