Written by John Swire
Planning financial obligations for the year ahead can ease cash flow and help farmers with their budgeting, according to rural accountant Old Mill.
“Whether your business has been affected by Covid-19 or not, planning for the year ahead can take the pressure off you and the farm, especially if there are advantageous schemes to opt in for,” says Oliver Bond, rural accountant and business adviser at Old Mill.
“Having a clear idea of what you can expect financially in the year ahead allows for better understanding of how the business is faring and whether there’s room for investment.”
With this in mind, here are some key financial dates to plan for in 2021.
31 January 2021: Self-assessment tax returns submission (online)
For those submitting a Self-Assessment tax return online, midnight on 31 January is the latest this can be done to avoid a penalty.
31 January 2021: Income Tax and National Insurance payments
Though this is a personal liability, for most farmers it will be the business footing the bill, so cash flow will need to be considered.
Farmers who took advantage of the option to defer the 31 July 2020 Income Tax payment should remember the upcoming payment will be correspondingly higher. “Whether this payment was deferred or not, the January payment will be based on income in the tax year to 5 April 2020, which was mostly pre-pandemic, meaning income levels may well be higher than for the 2020/21 tax year,” says Mr Bond.
“It may be a good idea to reduce payments on account that will be due in addition to the balancing payment for last year,” he adds. “However, be aware that many incomes may not fall significantly owing to the receipt of taxable COVID-19 grants and income support scheme payments. Your accountant should be able to advise on this. If it is not possible to pay your tax bill from cash reserves, you may be able to agree a Time to Pay Arrangement with HMRC, which will spread the liability over a number of months.”
3 March 2021: Spring Budget
“If the Spring Budget goes ahead, many expect the Chancellor to make a concerted effort to restock the Treasury’s coffers through tax reforms,” says Mr Bond. “The harshness of any tax reforms will likely depend on the state of the economy at the time, and given the recent lockdown restrictions imposed, it is unclear how daring the Chancellor will be.”
Spring 2021: Bounce Back Loan Scheme repayments
The one-year repayment holiday on the Bounce Back Loan Scheme will soon come to end, particularly for those who applied early, and businesses should expect repayments to begin automatically from that point. The loans can be repaid in full without incurring charges.
31 March 2021: Deferred VAT payments
Any VAT payments that were deferred during the first coronavirus lockdown are due to be paid on 31 March, explains Mr Bond. “However, businesses can now opt into a new scheme to repay VAT in instalments between 31 March 2021 and 31 March 2022, without incurring interest. It’s important to note that this is not automatic and you must opt-in.”
Quarter Days: Rent payments
Traditionally, quarterly land rents are payable by 25 March, 24 June, 29 September and 25 December. “If your forecasts indicate that these dates could be a problem for your business, now might be the time to start negotiating with your landlord. A switch to monthly rental payments would help to smooth cash flows.”
31 May 2021: Countryside Productivity Small Grant claims
The RPA deadline to submit claims for the Countryside Productivity Small Grant (CPSG) scheme has been extended to the end of May 2021, says Mr Bond. “This is key for those who successfully applied for the third round of the scheme, but who have not yet claimed. If the deadline is missed, you will not have the opportunity to claim.”
31 July: Income Tax and National Insurance Contributions
This is the deadline for self-assessment taxpayers to make their second ‘payment on account’, which is normally based on the previous year’s tax liability – being 50% of the tax paid for the 2019-20 tax year.
December 2021: Basic Payment Scheme income (reduced)
Do not budget cashflow on timely payments from the RPA and prepare for a percentage reduction of the BPS payments – between 5% and 25% reduction in value for 2021.
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