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“The content of this presentation has been prepared as a guide to topics of current financial business interest. We strongly recommend you take
professional advice before making decisions on matters discussed within. We can accept no responsibility for any loss to any person acting, or
refraining from acting, as a result of this material.”

Axminster · Barnstaple · Bideford · Bridgwater · Burnham on Sea · Crediton · Exeter · Holsworthy · Honiton · Ilfracombe
· Okehampton · Plymouth · Seaton · Somerton · Tiverton · Torquay · Weston super Mare

GRANTS AVAILABLE IN 2020
• Natural England - Countryside Stewardship scheme under EU
rules
• RPA –BPS.

The Environmental Land Management Scheme
Target Areas:
• Air quality
• Water quality
• Soil quality
• Increased biodiversity
• Climate change mitigation
• Cultural benefits
• Protection of historic environments

The key areas for farmers to focus on include:
 Using low emissions techniques to spread slurry by 2025 such as
dribble bars and trailing shoes.
 New and existing slurry storage facilities to be covered by 2027
 Washing down animal collection points soon after use.
 Incorporating manures into bare soils within 12 hours of spreading
 Ensuring levels of protein in livestock diets are matched to
nutritional needs
 Mandatory design standards for new intensive poultry, pig and
cattle housing

• Level of funding unknown.
• No clear direction from Defra.
• Cross compliance changes will cost British agriculture
money.
FINANCIN
G

THANK
YOU

• It is heavily subsidised and consequently very much
influenced by Government policy
• We all need to eat
• Customers in general more powerful than individual farmers
• In the main farmers are ‘commodity’ producers
• The business is very capital intensive
• Land values do not reflect ‘earning’ capacity
THE FARMING INDUSTRY IS UNLIKE MANY
OTHERS

1999 2019
£/acre £/acre % Change
Average Production 8.6t per ha 8.6t/per ha
Sales £75/t / £160/t £645 £1,376 113.3
Area Payment £243 £222 -8.6
GROSS OUTPUT £888 £1,598 80.0
VARIABLE COSTS
Seed £44 £80 81.8
Fertiliser £79 £193 144.3
Sprays £111 £197 77.5
TOTAL £234 £470 100.9
GROSS MARGIN £654 £906 38.5
WINTER WHEAT

1999 2019
£/acre £/acre % Change
Average Production 49.0t per ha 50.0t/per ha
Sales £80/t / £160/t £3,920 £8,000 104.1
GROSS OUTPUT £3,920 £8,000 104.1
VARIABLE COSTS
Seed £741 £1,020 37.7
Fertiliser £193 £605 213.5
Sprays / Nematicides £272 £874 221.3
Potato Levy £35 £45 28.6
TOTAL £1,241 £2,544 105.0
GROSS MARGIN £2,679 £5,456 103.7
POTATOES (BULK)

1999 2019
£/cow £/cow % Change
Average Production 7000 litres 7500 litres
Milk Sales 19ppl / 28.75ppl £1,330 £2,156 62.1
Calf sales £54 £147 172.2
Less Cow depreciation -£103 -£177 71.8
GROSS OUTPUT £1,281 £2,126 66.0
VARIABLE COSTS
Concentrates £120/£250/t £252 £600 138.1
Sundries £135 £230 70.4
Forage £90 £300 233.3
TOTAL £477 £1,130 136.9
DAIRY COWS

DAIRY REPLACEMENTS
1999 2019
£/Hfr Reared £/Hfr Reared % Change
Value of Down calving Heifer £625 £1,400 124.0
Less Calf -£79 -£147 86.1
GROSS OUTPUT £546 £1,253 129.5
VARIABLE COSTS
Concentrates £119 £355 198.3
Sundries £55 £106 92.7
Forage £88 £214 143.2
TOTAL £262 £675 157.6
GROSS MARGIN £284 £578 103.5

1999 2019
£/ewe £/ewe % Change
Lambs sold per 100 ewes 150 150
Lambs 95p/kg £53 £114 116.3
wool £2 £3 30.0
Ewe Premium £18 £0 -100.0
Less Replacement Costs -£13 -£22 74.6
GROSS OUTPUT £60 £95 57.4
VARIABLE COSTS
Concentrates £8 £14 80.0
Sundries £10 £17 70.0
Forage £9 £15 70.5
TOTAL £26 £46 73.0
LOWLAND SHEEP

• It is not always most economic to have the highest technical
performance
• Profits can be improved sometimes with a slightly lower yield
but with much lower costs
• Given the ‘Law of Diminishing Returns’ going for yield at the
expense of everything else is not always worth it – pedigree?
• Ensure correct levels of fertiliser and other inputs are being
used
• Get the basics right
TECHNICAL PERFORMANCE

• Biggest cost areas are usually machinery running costs and
property costs
• Contractors should always be considered and investment in
machinery carefully thought through. I remember when there
were no handlers on farms but just fore-end loaders -
£60,000 every 3 years for a new handler?
• Is the cropping appropriate / is all the land farmed near
enough to be economic
• Property costs – main contributing factor on this cost section
will be property maintenance and repair – it’s a voluntary
cost!
MANAGEMENT

• Rent, interest charges and depreciation – varies so much
to get similar output!
• Can be changed but generally takes time
• Is there a written down replacement policy for machines?
• Does that land have to be rented – owned – are optimal
fertiliser rates being used
STRUCTURAL COSTS

• Size – no
• Technical performance – no
• Good management – often
• Good structure – gives a better chance
WHAT MAKES A PROFITABLE
FARMER

• Having a plan
• Being prepared to learn from others
• Focus
• Determination
• Not scared of spending on calculated items
ATTRIBUTES

Success is the ability to achieve personal,
professional, and life goals. This is done through proper
planning, hard work, and will. The successful person is
the person who is capable of making the critical, bold
decisions to reach his desired goals.

Axminster · Barnstaple · Bideford · Bridgwater · Burnham on Sea · Crediton · Exeter · Holsworthy · Honiton · Ilfracombe
· Langport · Okehampton · Plymouth · Seaton · Somerton · Tiverton · Torquay · Weston super Mare

• Lifetime disposals – Capital Gains Tax
• Transfers on death – Inheritance Tax
CAPITAL TAXES

• Sale
• Gift
LIFETIME DISPOSALS

• Sale proceeds X
• Selling costs
(X)
• Acquisition cost (X)
• Costs of acquisition (X)
• Enhancement costs (X)
• Gain X
CALCULATING THE GAIN

• Non-residential property - 10% and 20%
• Residential properties - 18% and 28%
RATE OF CAPITAL GAINS TAX

• 31 January following the end of the tax year
• Gain in 2019/20 – tax due 31 January 2021
• From April 2020 capital gains tax due on disposal of
residential property will become due within 30 days of
completion
• Taxpayers who are within the self assessment system will
have to report the capital gain on their tax return as well
as completing the 30 day residential property return.
PAYMENT OF TAX

• Exchange of contract, not completion
• Need to watch payment by instalments
DATE OF DISPOSAL

• Principle Private Residence
• Lettings Relief
• Rollover Relief
• Holdover Relief
• Entrepreneurs Relief
RELIEFS

• Proceeds from qualifying assets are re-invested in
new qualifying assets
• Assets used in a trade
• Land and buildings
• Fixed plant and machinery
• Goodwill
• Re-investment 12m before to 36m after disposal
ROLLOVER RELIEF

ROLLOVER RELIEF
Asset 1 Asset 2
Proceeds £100,000 £130,000
Cost £20,000 £50,000
Gain £80,000 £80,000
Re-invest £50,000 £50,000
Rollover Relief £30,000 nil
Chargeable gain £50,000 £80,000

• Do you want to claim it?
ROLLOVER RELIEF

• Gifts of
Assets used in a trade/shares in trading
company
Agricultural property
• Transfers into trusts
• Do you want to claim it?
HOLDOVER RELIEF

• Reduces rate of tax to 10%
• Whole or identifiable part of business
• Asset used in business on cessation
• Personal asset used in partnership or personal
company
ENTREPRENEURS’ RELIEF

THANK YOU
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Our next update is Tuesday 11th
February

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Thomas Westcott Agricultural Seminar 16/10/2019

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