Making Tax Digital (MTD) and Farming

MTD, farming, VAT, Xero

As you will have no doubt heard, HM Revenue & Customs (HMRC) are introducing a new way to file a business’ VAT returns from 1 April 2019. For VAT registered businesses with a turnover over the VAT threshold, currently £85,000, this is generally mandatory – there are exceptions, via religious beliefs, age exception and internet speed, however HMRC do not anticipate too many businesses falling within these criteria.

What does it entail?

In simple terms, VAT returns must be filed digitally direct from software, with all the transactional detail that make up a VAT return’s figures being within software. This will come into force for the first VAT return commencing after 1 April 2019, so if you have a May 2019 VAT return, the first VAT return on the new system would be the quarter to 31 August 2019. If you have monthly VAT returns, it would be the month of April 2019.

Which software?

There are many providers of MTD enabled software on the market, most on a subscription basis, so which do you choose? Your accountant may suggest one they prefer, however, it may not provide the management detail you would prefer. If you are looking for a reasonably priced software, yet easy to use and tailored to farming, then Farmplan Cash Focus or Cash Manager could be the right fit for your business. Other mainstream software packages including QuickBooks, Sage and Xero are also available, however, they may not provide the management detail of benefit to you and your business.

As accountants, we are happy to work with any of the above, and others too. We suggest a software package that suits your own requirements and needs, and can talk through the prices of different packages with you. If you would like a demonstration of Farmplan, then please just contact your usual contact or any of the Saint & Co farming team.

The costs

Farmplan Cash Focus is £198 + VAT per year on an annual contract. This software is simply analysing the bank transactions and any other business income/expenses not through the main bank account, with the facility to produce a variety of reports from the data held, together with filing of the VAT. The software is desktop software with the facility of cloud backups, and should suit many farmers. As accountants, we can then use the data for annual accounts, cash flow projections and much more. Other variants of Farmplan, giving extra functionality come at extra cost.

Xero, QuickBooks and Sage pricing is around £10 to £25 per month, depending on the version you use. Each has its own merits, and may be of more relevance to your own business.

If you would prefer Saint & Co to do your VAT calculations, then please contact us. Preparing your VAT quarterly will help to prepare your annual accounts, and can also help with tax planning opportunities throughout the year.

Have staff?

If you require payroll functionality, then all the software above have payroll software capabilities, albeit, this will be at extra cost – costs being dependent generally on the number of employees.

If you want to know more, talk through your options, or discuss anything else, please contact us

Saint & Co to attend this year’s Borderway Agri Expo

Friday the 2nd of November marks the 12th annual Borderway Agri Expo. Saint & Co. will be in attendance, sharing their agricultural accounting know-how.

The Borderway Agri Expo is one of the largest agricultural events in the UK, attracting thousands of visitors every year.

It showcases the very best quality sheep and beef cattle, the latest farming practice developments, cutting edge machinery, equipment, and technology, and discusses important environmental issues, export opportunities, and livestock marketing.

As far as the UK agri industry goes, Borderway is now firmly established as a true celebration of the best in British livestock, and the people who look after them. And Saint & Co. will be there to offer accountancy advice and guidance tailored to the farming community.

“We’re sending along 4 or 5 of our partners to chat with attendees about their agricultural accounting challenges and opportunities.” explains Agricultural Adviser, Will Robinson. “We expect to see around 100 of our existing clients there, and we hope to meet many more people throughout the course of the event.”

The Saint partners in attendance will all have experience in working with those in the farming industry, and can offer advice related to specialist accounting software, Xero, taxes, VAT, annual accounts, forecasts, and cash flow.

The Saint & Co. at stand (number 76) can be found  next to agricultural accounting software Farmplan.

  • If you’d like to learn more about Saint & Co.’s services, you can get in touch with us, just visit our website: saint.co.uk.

 

  • Or if you’re interested in switching to Xero, they also run drop-in days to view demos and answer questions. The next drop-in day is Wednesday the 5th of December.

 

  • And finally, Saint & Co. will be running a free Inheritance Tax and Estate Planning event, complete with wine tasting and buffet, on Thursday the 22nd of November.Booking is essential as places are limited. To book your place, contact Jane MacLachlan on: 01228 534371, or via email: jane.maclachlan@saint.co.uk.

Is your milk price increasing your tax payable?

With the average farm gate pence per litre/kg increasing significantly over the last year, in some cases by more than 10p per litre/kg to a current average of around 27 to 28 p per litre, the effects on profitability and hence possible tax payable, be it personal tax or corporation tax, are significant. Optimising production to align as best as possible to your buyers profiles can further enhance the pence per litre achieved. On 1 million litres of production, a 1p per litre movement equates to £10,000 movement on annual milk income – if costs are kept constant, this goes straight to the “bottom line”.

Many dairy farmers had a poor 2016/17 trading year, when looking at either accounts or taxable profits compared to the previous years. Farmers averaging, be it either over 2 or 5 years has been used in many cases, and so a tax reclaim has resulted. As farmers, you will no doubt have appreciated a reasonable tax refund or less personal tax payable in July 2017 and January 2018. With costs being cut as much as possible in 2016/17, and continuing into 2017/18, profitability is likely to have improved significantly in 2017/18.

So, what of the July 2018 and January 2019 personal tax payable? Personal tax instalments are calculated as half the tax due from the previous accounts year, and in the case of the January payment, the balance of tax due for the accounts year that falls within the year to 5 April the previous year. As the personal tax for 2016/17 is likely to be significantly less than due for 2017/18, the January 2019 tax payable may be a shock to some, although further averaging could affect this too.

Many accountants suggest buying equipment before the end of the accounts year – why is this? The answer is because generally 100% of the cost of the equipment (subject to any trade in) can be offset against the accounts taxable profits up to a £200,000 annual net spend – if you spend more than this in a year, you get less allowances in the year on the portion over £200,000, however, there are allowances to carry forward to subsequent years whereby reducing tax in the future, albeit to a lesser extent.

If you did not purchase equipment before your accounts year end, all is not lost. There is the possibility to reduce the “payments on account” for personal tax if you feel that your taxable profits for 2018/19 will fall. Doing this should not be considered lightly. If the actual taxable profits are more than anticipated, there could be interest payable to HMRC on the tax “paid late”.

If you would like to discuss any of the above, or have concerns about a possibly large tax bill in January 2019 please contact your usual contact or any of our farming team throughout Cumbria & SW Scotland. For specific dairy related queries, or if you are looking at maximising the value of the milk you produce, contact Will Robinson in our Carlisle office on 01228 534371, 07475 470132 or email wr@saint.co.uk

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Will Robinson, Farm Advisor Carlisle Office

Taking stock – is bigger better?

grain

While there is a drive to become ever more efficient in all types of agriculture, there becomes a point where bigger is not necessarily better. Whether it be livestock or arable, sheep, cattle or pigs, getting the right level of stock and equipment for your own business can make a big difference. Getting the “goldilocks effect” on your outputs, being “just right” for your own system can be the key.

 

Arable

Increased costs associated with an increased operation tend to be generally around the buildings and equipment, together with available land at the right quality, location and price, although not always in that order. Is there enough storage capacity? Is the combine/chaser/drier capable of coping with the extra work in the available weather windows? Harvesting at the right moment with minimal loss is the ideal, but if the combine can’t cover the hectares, extra help may be required. An extra combine could mean extra labour to cart the crops, and the drying capacity may need upgrading too.

Forward contracts can help with knowing your sales price for the crops you produce, however, expected and actual yields can and do vary, and arable can be very much hampered by weather. Ensuring you have enough physical crop to fulfil a forward contract can be essential. Obviously, the markets can both fall and rise, however, knowing selling and purchase prices can give security.

Bigger is not always better, it is simply another way of farming the land available, problems are not necessarily larger, but management of the issues, good or bad, that face you as a business owner may define your business moving forward! Standing still is not always a step backwards, and careful consideration should always be made when looking to change the scale of your operation.

If you would like to discuss any of these issues further, then please do not hesitate in contacting either Will Robinson at Carlisle on 01228 534371 or email wr@saint.co.uk, or one of the Agricultural Team spread right across Cumbria & South West Scotland.

 

4 ways to improve your farming business

Farming isn’t an industry for the faint-hearted. It’s tough, physical work that requires strength of spirit and real tenacity to keep the business stable and turning over enough revenue to keep the farm afloat.

Here at Saint & Co, we appreciate that it can be difficult to drag yourself away from the day-to-day running of your farm in order to look at the underlying financial and strategic elements of your farming business.

But, take it from us, finding the time in your working week to consider the effectiveness of the business elements of your farm is the best way to secure your long-term future and profitability.

So, with this in mind, we’ve highlighted four key areas that every ambitious farmer should have on their business to-do list.

Read more →

Borderway Agri-Expo 2015

On Friday, 30th October 2015 Saint & Co will be at the Borderway Agri-Expo, Borderway, Rosehill, Carlisle, Cumbria, CA1 2RS (adjacent to J43 of M6 motorway).

Come and see us at our stand (stand 3) for a chat and enter our FREE competition to win a superb hamper.