A leading accountant has highlighted the growing pressures now impacting farm incomes in Northern Ireland.
And the continuing decline in farmgate prices is an important factor in this regard, Omagh-based Seamus McCaffrey said.
“But there are many other issues adding to the complexity of the financial challenges confronting agriculture as a whole,” he said.
McCaffrey cited the growing threat of bovine tuberculosis (bTB) as a case in point.
“Many of our clients have their herds restricted at the present time because of the disease,” he said.
“As a consequence, they are having to manage greater numbers of stock than would normally be the case. This is adding significantly to the costs incurred by these businesses.
“Many farmers are also concerned that they won’t have enough silage saved to see them through the coming winter. The issue of silage quality is a related matter.”
Farm incomes and tax
The accountant said that the possibility of concentrate feed costs rising over the coming months has also been factored-in by many farmers.
It all adds up to a scenario that will have significant cashflow and tax implications for farm businesses over the coming months.
According to McCaffrey, effective tax planning at a time of reduced prices is critically important for all farm businesses.
Centre stage within all of this is January 31, 2024, the next date when all sole traders and those involved within business partnership must pay tax.
There will be two components to the liability to be paid – the balance of the tax owing up to April 5, 2023 and a payment on account for the current year.
“The balance piece is based on the actual tax return and accounts filed for the year ending April 5, 2023,” McCaffrey said.
“The payment on account for the current year is normally 50% of the previous year’s liability. However, it is possible to pay a lesser payment on account.
“The way to do this is prepare profit and loss figures for the current year to-date, which will enable an informed guestimate to be made of the tax liability for the current year.
“If this projected liability for the current year is less than the final liability for the year ending April 5, 2023, then a lower amount of tax can be paid as a payment on account in January 24.”
McCaffrey went on to point out that before the tax return for the year ending April 5, 2023 is filed, it is important to review carefully that the return is accurate and that all income and expenditure are included.
“The following question should be addressed – have all items of allowable expenditure been included?” he said.
“This list can include the following: The cost of trips to agricultural shows; the cost of buying the farming press; the cost of wages to family members aged 13 and above.”