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What measures can farmers take to improve their net profits? LIZ PLUME considers some options
KEY POINTS
- The ‘do nothing’ option.
- Buy more machinery.
- Benefit of paying into a pension scheme.
- Take on a corporate partner.
- Is incorporation the answer?
The reduction in the annual investment allowance (AIA) from April 2012 combined with higher grain sheep and cattle prices and recent rises in the milk price which is still currently two to three pence a litre less than in mainland Europe mean a significant number of farming partnerships could become liable to tax and National Insurance at the higher rate of 42% or even 52%.
Take a husband and wife partnership realising taxable profits each year of approximately £130 000 before annual allowances.
Without taking any action to mitigate the tax and assuming no other taxable income this would...
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