Farmers could enjoy tax boost

Farms that incorporate into a limited company could save thousands of pounds of tax, according to advisers.

Accountants Old Mill Rural Services said that businesses which incorporate after the introduction of the single farm payment (SFP) can receive an element of the payment tax free by transferring the entitlement into the limited company or partner.

SFP entitlements are classed as intangible assets and can be written off against their income, said Old Mill partner Mike Butler.

Although the transfer could incur a CGT bill, the introduction of entrepreneur's relief on incorporation will significantly reduce that bill.

'In total, a typical farming business could save more than £35,000 in tax by incorporating after the SFP was introduced,' said Butler.

But he warned that impending anti-avoidance legislation meant it was particularly important to move into the new corporate structure with 'sound commercial justification'.

The SFP is the main agricultural subsidy scheme.

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