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Farms could stave off financial difficulty and save thousands of pounds of tax by
becoming a limited company.
According to accountants Old Mill Rural Services, businesses which incorporate
after the introduction of the single farm payment (SFP) can receive an element
of the payment tax free by transferring the entitlement into the limited company
or partner.
SFP entitlements are classed as intangible assets and can be written off against
their income, said Old Mill partner Mike Butler.
Although the transfer could incur a CGT bill, the introduction of entrepreneur's
relief on incorporation will significantly reduce that bill.
"In total, a typical farming business could save more than £35,000 in tax by
incorporating after the SFP was introduced", said Butler.
But he warned that impending anti-avoidance legislation meant it was
particularly important to move into the new corporate structure with 'sound
commercial justification'.
Source:
RedAlert
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