To build a grain store or not?

Grower Tesque · Apr 15, 2020

Our grain is stored at a 3rd party store which is 5 miles away from home, on the whole works well but there are a few niggles. I keep toying with the idea of building our own store.

Currently it costs us about £13,500/yr (£12.20/t) to store, this includes monthly costs for electric for fans, loading lorries but not drying

I reckon I can build a store inc. concrete yard plus mobile dryer for £150k, or £11,100/yr for 20 years (£10.09/t), this does not include drying costs, electricity running fans or loading lorries

Is the £2300 saving worth the extra hassle?

Richard98 · Apr 15, 2020

Yes, build your own then you’re totally in control of your own grain and you will soon find the shed will become very handy storage during the rest of the year. Build it once and you’ve got it for a long time to come, a shed can always make you money renting it out or storing for someone else etc in the future.
5 years ago we put up a second grain store, before that we had to sell the winter barley straight off the combine to fit the wheat and beans in, getting lorries at harvest was a nightmare and the stress of can’t start the wheat till the barley had gone etc, and always got screwed by the merchant. Dad has recorded harvest prices and prices later in the year and can’t remember how many thousand he worked out we save a year by selling when we want to. Not quite the same scenario as you but would still be of benefit having your own.

Nearly · Apr 15, 2020

A grain store can count as an item of plant and be sensible to build in taxation terms.
Normal buildings are a tax liability.

Crack on.

Hilly · Apr 15, 2020

Yes build it .

David. · Apr 15, 2020

The 13.5k is fully tax deductible. My accountant would not accept that the shed and concrete are, I dont think.
My instinct is always to build your own, but if there are no extras or up front payments on your present arrangement it will be hard to beat financially, surely?
That said, a shed will always be yours, and could be a future alternative income source.

Nearly · Apr 15, 2020

David. said:
The 13.5k is fully tax deductible. My accountant would not accept that the shed and concrete are, I dont think.
My instinct is always to build your own, but if there are no extras or up front payments on your present arrangement it will be hard to beat financially, surely?
That said, a shed will always be yours and could be a future income source.

A purpose built grain store and handling plant is classed as an item of plant.
I know people who have built 2.

teslacoils · Apr 15, 2020

Get better accountant.

farmerdan7618 · Apr 15, 2020

David. said:
The 13.5k is fully tax deductible. My accountant would not accept that the shed and concrete are, I dont think.
My instinct is always to build your own, but if there are no extras or up front payments on your present arrangement it will be hard to beat financially, surely?
That said, a shed will always be yours and could be a future income source.

All went through the First Tier Tribunal last year in the May vs HMRC case. Some hoops to jump through regarding being a specific grain store rather than a general purpose shed, but tax relief available on the lot.

Steevo · Apr 15, 2020

teslacoils said:
Get better accountant.

I'm not sure it's about the quality of the accountant......more ensuring that the works you do put you the right side of the line.

Two Tone · Apr 15, 2020

The saving you are talking about really isn’t worth the hassle.
I’ll bet your building over-runs on cost and you’ll regret the extra work and worry of it.
Rodent control and Crop assurance alone will soon pee you off.

Steevo · Apr 15, 2020

Two Tone said:
The saving you are talking about really isn’t worth the hassle.
I’ll bet your building over-runs on cost and you’ll regret the extra work and worry of it.
Rodent control and Crop assurance alone will soon pee you off.

Agreed from a financial perspective.

It's the fringe benefits/hassles that make this worthwhile or not as you mention e.g. rodent control, waiting for lorries in winter, hassle of having to deal with your own wet corn in harvest vs. ability to do own drying when suits, shed available rest of the year when not storing grain, asset that could be converted in the future etc.

Banana Bar · Apr 15, 2020

Build

Tarw Coch · Apr 15, 2020

Steevo said:
I'm not sure it's about the quality of the accountant......more ensuring that the works you do put you the right side of the line.

And the invoice is worded right.

David. · Apr 15, 2020

farmerdan7618 said:
All went through the First Tier Tribunal last year in the May vs HMRC case. Some hoops to jump through regarding being a specific grain store rather than a general purpose shed, but tax relief available on the lot.

Interesting; my accountant was not really wrong then 6yrs ago, by sounds of it..

Exfarmer · Apr 15, 2020

teslacoils said:
Get better accountant.

I think you will find all accountants have in their terms and conditions that you the client are finally responsible. Never mind you can insure with their client insurer to cover , you the client, against the cost of a tax investigation.
However this cover does not include the cost of any extra tax and penalties that may be levied upon the client as a result of this investigation. It only covers the extended costs that the accountant incurs during the cost of this investigation.

teslacoils · Apr 15, 2020

Exfarmer said:
I think you will find all accountants have in their terms and conditions that you the client are finally responsible. Never mind you can insure with their client insurer to cover , you the client, against the cost of a tax investigation.
However this cover does not include the cost of any extra tax and penalties that may be levied upon the client as a result of this investigation. It only covers the extended costs that the accountant incurs during the cost of this investigation.

Tbh I'd expect an accountant doing farms to have seen and read the details of the case for grain stores and to be able to advise me what I needed to do to get it all through the books. Is that an unfair expectation of someone who gets quite a big pile of fees? I don't think so, given its a few minutes research to the question "how do I build a tax efficient grain store?".

Tarw Coch · Apr 16, 2020

teslacoils said:
Tbh I'd expect an accountant doing farms to have seen and read the details of the case for grain stores and to be able to advise me what I needed to do to get it all through the books. Is that an unfair expectation of someone who gets quite a big pile of fees? I don't think so, given its a few minutes research to the question "how do I build a tax efficient grain store?".

Quite agree that I’d expect advice off my accountant but it’s best to seek it before you build than just submitting the bills for the finished project.

Doing it for the kids · Apr 16, 2020

whats it’s use potential as a plan b?

given where we are with farming, if you can re let it for commercial use if circumstances change then it’s comforting to know.

if plan b is a good one and you own the farm etc then doing so would be a useful long term plan

B R C · Apr 16, 2020

Please enlighten us how a grain store is allowable 100%. How is it different to a straw store, or a shed to store logs for selling? Concrete panels yes but the rest of the shed? Has there been a test case?

Tarw Coch · Apr 16, 2020

B R C said:
Please enlighten us how a grain store is allowable 100%. How is it different to a straw store, or a shed to store logs for selling? Concrete panels yes but the rest of the shed? Has there been a test case?

Yes, there has been a test case, iirc there needs to be a link to the drying and storage.

To build a grain store or not?

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Up to 25%

25-50%

50-75%

75-100%

100% I’ve had enough of farming!

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