At the start of the month, we joined Hillsgreen and Butcher & Barlow LLP to give a quick overview of the things you need to consider if you're looking to diversify.
At the beginning of October, we were thrilled to join
Hillsgreen’s Rural Roundtable alongside Butcher & Barlow LLP to discuss
Between Andy Venables, Rebecca Jepson, and our very own Suzanne Preston, we gave the listeners a whistle-stop tour of the things you need to consider if you’re looking to diversify. Diversification certainly does bring a whole host of opportunities for extra income, but there must be important areas considered.
Diversification in the UK
In a recent report published by the National Farmers Union, it stated that approximately 48% of farmers have diversified – and with good reason too. Agriculture is changing for a whole host of reasons. We are seeing reductions in subsidies, stricter measures in place for conservation, and extreme weather conditions decimating profits within the industry, so it’s easy to understand why farmers are looking to stabilise their income.
But diversification is not a quick whim decision and does
require detailed planning to be successful.
Doing the Maths
Having an idea is where it all begins, but we see so many
farmers stepping into some big decisions (and debts) without making sure that
their diversification is viable. You need to know exactly how much your
diversification will cost in order to establish if you have the money to invest
in the first place.
If you’re looking to diversify:
Make sure you know how much your diversification
will cost to set up.
Make sure you have a robust forecast in place.
PREPARE FOR EVERY EVENTUALITY!*
*If this year has taught us anything, it’s that
you must always prepare for the unexpected.
Another area within the budgets that is often forgotten is over-trading. We are all guilty of not looking towards the future enough, but in this case, it’s a must. If you have any plans to expand in the future, you must make sure that your lending can support this – It’s a MUST HAVE discussion between yourselves and your bank manager, and it could just stop you from losing your business.
Tax Tax Tax
Yes, we said it – the dreaded T word does need to be considered. The truth is, there is no one hard and fast rule when it comes to tax and your diversification because every idea will have different implications. The tax considerations you need to think of are:
Value-added Tax (VAT)
Inheritance Tax (IHT)
Capital Gains Tax (CGT)
We would strongly advise seeking advice from a trusted
advisor to ensure that you have your affairs in order to start your
diversification journey – With proper planning and advice, it can be an
exciting, and profitable journey!
Want to find out more? Why not listen to the full webinar
Diversification opens up a lot of opportunities for extra income, however, there are some key considerations to think about first.”