Accountancy | Tax Planning | Business Support

This is one of the most complex processes undertaken by a farmer and it should not be taken lightly.  There are many reasons to operate as a partnership or sole trader rather than as a company, and normally the answer is not to incorporate, however, there are some farmers that should take this very seriously.

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Young farmers that are very profitable and don't need all the money they make

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Young, in this context is those farmers who can expect to farm for at least another 15 years.

 

Profitable means consistently making more than £50k per partner and especially if making more than £100k.

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The key here though, is that you don't need all of the profit because if you simply withdraw everything as dividends there will be no benefit to incorporating.  If however you can leave a lot of profit in the company, you will feel the benefit of the lower corporate tax rates, which will outweigh any IHT concerns that would normally put a stop to an incirporation.

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There are of course other reasons to incorporate, for example to immediately reduce the value of a partners assets who will go from owning a share of those assets as a partner, to instead owning some proportion of shares in a company which are worth less (that's just how it works, your legal ownership is less valuable).

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If you would like to explore this, please get in to contact.

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