TAX on capital grant roofs?

JCB_JCR

Member
Livestock Farmer
Location
Somerset
Does anyone know the TAX situation with countryside stewardship capital grants roofing slurry stores, etc?

I think I'm right in thinking that if we built a new shed we'd get taxed on the cost of it. Does this still apply to grant sheds? Accountant is giving us mixed messages and has confused us.

Do we get taxed on the £20,000 we received/spent on roofing our slurry store?
Cheers
 

Bill the Bass

Member
Livestock Farmer
Location
Cumbria
Does anyone know the TAX situation with countryside stewardship capital grants roofing slurry stores, etc?

I think I'm right in thinking that if we built a new shed we'd get taxed on the cost of it. Does this still apply to grant sheds? Accountant is giving us mixed messages and has confused us.

Do we get taxed on the £20,000 we received/spent on roofing our slurry store?
Cheers
Yes, it’s income.
 

farmerdan7618

Member
Livestock Farmer
Location
Somerset
Tax treatment on grants follows the tax treatment on what the grant is spent on.

E.g - grant on a building that is written down at 3% per year is taxed at 3% per year.

Grant on a slurry store that is tax deductible in full through Annual Investment Allowance, is taxed in full in the same period.

Grant on fencing repairs that are tax deductible in full is taxed in full in the same period.

Farm buildings do get tax relief now, and have done since October 2018. It's not particularly exciting at 3% per year though.
 

JCB_JCR

Member
Livestock Farmer
Location
Somerset
If I understand that correctly I'll be taxed as if the £20k slurry pit roof is profit? Which is a bit of a bugger because hadn't budgeted on it "costing" me anything.
Would like an example of how the 3%works in numbers please because I don't think I understand that bit.
TAX and accounting depreciation etc does make understanding end of year accounts challenging at best!
 

mo!

Member
Livestock Farmer
Location
York
If I understand that correctly I'll be taxed as if the £20k slurry pit roof is profit? Which is a bit of a bugger because hadn't budgeted on it "costing" me anything.
Would like an example of how the 3%works in numbers please because I don't think I understand that bit.
TAX and accounting depreciation etc does make understanding end of year accounts challenging at best!
You shouldn't be taxed on the grant as profit. Maybe this is a conversation you should be having with your accountant?
 

Chickcatcher

Member
Location
SG9 0RG
Surely the grant income say £20K would be removed from the expenditure on what the grant was payable on. So if it cost you £40k take of the £20K leaving £20K to be the expenditure that would be available for any tax relief.
 

farmerdan7618

Member
Livestock Farmer
Location
Somerset
If I understand that correctly I'll be taxed as if the £20k slurry pit roof is profit? Which is a bit of a bugger because hadn't budgeted on it "costing" me anything.
Would like an example of how the 3%works in numbers please because I don't think I understand that bit.
TAX and accounting depreciation etc does make understanding end of year accounts challenging at best!
I'll put an example up of each of the three scenarios, 100k grant for each to make the numbers easy to read.
 

farmerdan7618

Member
Livestock Farmer
Location
Somerset
Recieve grant of 100k, spend on a building, write down for tax at 3% per year.

Year 1:
3k tax relief on building
3k tax charge on grant income
Tax effect = nil
Depreciation shown against accounting profit and not relevant to tax.

Year 2
3k tax relief on building
3k tax charge on grant income
Tax effect = nil
Depreciation shown against accounting profit and not relevant to tax

Repeat until building cost and grant income is all gone.
 

farmerdan7618

Member
Livestock Farmer
Location
Somerset
Recieve grant of 100k, spend on a slurry store, claim Annual Investment Allowance.

Year 1:
100k tax relief on slurry store
100k tax charge on grant income
Net tax effect = nil
Depreciation shown against accounting profit and not relevant to tax

Year 2:
Depreciation shown against accounting profit and not relevant to tax.
 

farmerdan7618

Member
Livestock Farmer
Location
Somerset
Recieve grant of 100k, spend on fencing repairs.

Year 1:
100k tax relief on fencing repairs
100k tax charge on grant income
Net tax effect = nil
Full cost of repairs shown against accounting profit.

No longer term effects.
 

farmerdan7618

Member
Livestock Farmer
Location
Somerset
In simple terms, grants put you back in the position you would be in if you hadn't received it and hadn't spent it.

Accountant should be able to run through any specific scenarios, and can explain the differences between accounts and tax to you.
 

JCB_JCR

Member
Livestock Farmer
Location
Somerset
Thanks. Don't quite understand the 3% scenario. Without grant. If you spent 100k on building (assuming you also made 100k profit that year) you get taxed on 97k in 1st year but get a 3k tax relief on profits made in 2nd, 3rd... years?
 

farmerdan7618

Member
Livestock Farmer
Location
Somerset
Thanks. Don't quite understand the 3% scenario. Without grant. If you spent 100k on building (assuming you also made 100k profit that year) you get taxed on 97k in 1st year but get a 3k tax relief on profits made in 2nd, 3rd... years?
That's right, without the grant buildings get tax relief at 3% per year.
 

Rejuvenating swards: Which option is best?

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Written by Brian McDonnell

Maintaining grass quality during mid-season grazing is important. Farmers can maintain quality by entering ideal grazing covers of 1,300 – 1,500kg DM/ha, and grazing down to a residual of 4cm every rotation.

If you are now in a situation where cows are not cleaning out paddocks as well as they should be, leading to the development of steamy grass within the sward, here are some options.

Common options for rejuvenating swards include:

  1. Take a silage cut, probably into bales, remove the material and start again with the aftermath...
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