Upcoming dates to keep in mind

Farmers across Scotland may have had empty diaries over the past few months with the cancellation of the agricultural show season, however there are some upcoming dates that they will not want to miss.

As farmers continue to prepare for an extremely hectic harvest period, both HMRC and the Scottish Government have released new and relaunched old support mechanisms for farmers.

However, these vital supports may be lost if key dates are missed, emails unread or mail forgotten about during harvest.

Firstly is a welcome extension to the self-employed income support scheme through a second and final grant being claimable from August 17. HMRC will again contact eligible farmers.

A key message, however, is that if a farmer decided not to claim for the first grant because their business had not been affected or they did not envisage their business would be adversely affected by Covid-19, they can still make a claim under the second grant.

When assessing if their businesses have been adversely affected, farmers should consider any scaling down of production, inability to sell existing produce or increased costs.

The deadline for making a claim under the second grant scheme is October 19 2020.

The amount of the second grant is 70% of average monthly trading, a 10% drop from the first round of claims, and the maximum cap is £6,570 compared to £7,500 previously.

The second support mechanism is the launch or relaunch by the Scottish Government of the Basic Payment Scheme (BPS) loan scheme.

Rural Economy Secretary Fergus Ewing said: “We have decided to offer the loan scheme so that farmers can access this support at the earliest ever point.”

It is a clear indication that the

Scottish Government envisages cashflow pressure on farmers due to coronavirus and the uncertainty around the Brexit timetable.

As with previous years, applicants can access 95% of their 2020 BPS and greening payments, subject to a maximum amount of £133,638.

Letters will be sent to farmers in early August with payments being made from September – three months earlier than the “normal” December payment dates.

Mr Ewing and NFU Scotland president Andrew McCornick have both encouraged farmers to opt into this scheme via email to allow for efficient processing of the loan application.

Whilst this is a welcome boost and does provide reassurance to farmers, caution should also be taken.

As funds are received earlier, the temptation may be to spend it on the here and now, however many businesses must factor early receipt into farm cashflows.

Farming businesses may have, for example, annual hire purchase payment commitments matched to receipt of BPS, therefore the funds still need to be there in December to make these payments.

The greatest luxury this scheme buys is time, something which is scarce during an already pressurised period on the farm.

A further HMRC support mechanism for lightening the load on farmers is the deferral of the July payment on account for income tax for the self-employed.

Farmers accustomed to paying tax on July 31 will have noticed that correspondence from HMRC automatically defers the July 2020 payment to January 2021.

I have a word of caution, however – this deferral will result in potentially three tax payments being made in January 2021. The July 2020 payment, a balancing payment for the 2020 tax year and the first payment on account for the 2021 tax year.

It is advisable that farmers with pre-April 5 2020 business year ends engage now with their accountants.

Given that 2019 yields were good and prices held for most of the year in most markets, with the exception of beef, it is very likely that tax bills for 2020 will be higher than those in 2019.

Clarity over the farm’s tax position will assist with cashflow planning and discussions with bank managers over the coming months.

“The greatest luxury this scheme buys is time...

Harvest time is always an exceptionally busy period for farmers – but they should bear in mind application dates for various support mechanisms.