Year End Planning

Many agricultural businesses changed their year-end to line up with the tax year under the Basis Period Reform rules. With the end of March now on the horizon, what should businesses be doing before their year-end and what do they need to know?

The change of basis saw some businesses with extended accounting periods reporting higher profits, resulting in higher tax liabilities and indeed higher payments on account for 2024/25. However, with the 2024 arable harvest result being generally suppressed due to lower crop prices and poor establishment conditions in autumn 2023, there may be scope to get the payments on account reduced, if not done so already.

As per the October 2024 Budget, the rules for double cab pick-up trucks (DCPUs) are changing; DCPUs will be classified as cars rather than commercial vehicles for benefit-in-kind and capital allowance purposes from April 2025. However, for DCPUs already owned by April 2025, they will potentially remain as previously treated until April 2029. The same is true for vehicles ordered prior to April 2025 and delivered before October 2025.

Changes for employers effective from April 2025 are increases to the Employer’s National Insurance rate and the threshold at which this becomes applicable, together with increases to National Living Wage and National Minimum Wage. These will undoubtedly have an impact on rural businesses and particularly those in the hospitality sector. Unfortunately, there is little that can be done to mitigate these changes, but employers need to be aware.

Business Asset Disposal Relief (BADR) can be used to reduce the rate of Capital Gains Tax (CGT) on qualifying asset disposals to 10%. However, from April 2025, BADR will only reduce the CGT rate to 14%. There may still be time to sell before April and lock in the lower rate!

Finally, changes to Inheritance Tax (IHT). The main thing that business owners need to be doing to assess and potentially mitigate the impact of the changes coming into effect from April 2026, is to understand the contents and values within their estates. Once known, discuss with your accountant to develop an action plan to pass as much of the business to the next generation without incurring a detrimental IHT burden.

Fingers firmly crossed for some positive news in the Spring Statement on 26 March 2025!