VAT changes from 1 October
Farmers operating diversified businesses need to be aware that VAT increased from 5% to 12.5% from 1 October. The affected areas of operation include premises where food and drinks are consumed and / or operate as takeaways; holiday lets; pitch fees for tents and caravans; and some visitor attractions. Businesses would do well to take advance payment and deposits for bookings for the period after 31 March 2022, because payments made between 1 October 2021 and 31 March 2022 will be subject to 12.5% VAT rather than the full 20% rate to be reinstated on 1 April. If you have any queries on anything VAT-related, our VAT partner, Kevin Hall, will be delighted to help.
Anti-water pollution measures
In August, the government announced it is doubling the funding for the Catchment Sensitive Farming (CSF) programme to £30m. This means that every farmer in England will now have access to free advice on how they can reduce on-farm water and air pollution. Suggested solutions include buffer strips, riverside trees and better slurry storage. The extra funding will also provide 50 new Environment Agency inspectors to carry out farm inspections. Grants are also available from Natural England for precision farming equipment to reduce inputs and improve soil health. In addition, the Environment Act also places an obligation on water companies to tackle storm overflows by monitoring water quality (and publish the results) in order to reduce sewage discharge into rivers.
New schemes to help BPS transition
Other schemes to help farmers adjust to a post-BPS world include Capital Grant Schemes (for purchasing equipment and technology); Farming in Protected Landscapes (including AONB) that will fund projects based on four themes: climate, nature, people and place; and the Farming Resilience Fund. Grants from the latter have been awarded to 19 organisations so they can deliver free advice and support to farmers in receipt of BPS, on how to manage the impact of reduced direct payments. Lessons learnt from this initial phase, due to end March 2022, will then be incorporated into the next stage of support from 2022 until 2024.
Lump sum exit payments
The government consultation on how this scheme should be administered closed in the summer and its response is due towards the end of the year. Respondents, including the CLA, have raised a number of points that need to be resolved if the scheme is to have a meaningful uptake, not least farming business structures, tax treatment, eligibility to enter future agri-environmental schemes under ELMS, and the timescales for applying. The CLA noted that farming businesses with succession plans that are reflected in the business’ structure could struggle to take advantage of the scheme if it meant that the remaining partners / shareholders were prevented from applying for Countryside Stewardship schemes.
True value of farm shops to be revealed
The Farm Retail Association (FRA) is joining forces with Harper Adams University to understand the contribution that Britain’s farm shops make to the rural economy. With the search for worthy winners of the BBC Farm and Food Awards currently underway, and farm businesses analysing potential new income schemes, the research study couldn’t be more timely. The FRA have stated that this is the biggest research project it has ever undertaken and is keen for all farm retailers to take part.
Reintroduction of beavers
The reintroduction of species formerly native to Britain is a contentious subject but one that is gathering considerable support. In the wake of the successful colonisation of part of the River Otter by beavers, Defra has launched a consultation on the release and management of more beavers (within England only). This type of reintroduction is supported by the 25 Year Environment Plan but only ‘where the environmental, social and economic benefits are clear’. The consultation closed on 17 November 2021 and the government is expected to respond in the new year.