Food production stands as a cornerstone of our nation’s economy, representing a vital necessity for all. However, the farming industry faces recurring challenges hindering its prosperity, making profitability increasingly elusive.
Farming is more than just a job; it’s a lifestyle that values more than money. In today’s complex agricultural landscape, farms often need to diversify their operations strategically to thrive.
Diversification presents a wide range of possibilities, ranging from establishing farm shops to creating glamping sites or repurposing structures into business units or recreational areas.
Selecting the appropriate business structure for diversification demands careful consideration, whether integrating it with existing farming activities or establishing it as a distinct entity, such as a limited company or partnership. Several factors warrant attention, and here are some listed below:
- Input VAT Recovery: It’s important to evaluate how much VAT can be reclaimed, especially for building costs, particularly if constructing new buildings for renting out.
- Business Property Relief: Keeping qualification for inheritance tax relief on business property tax requires careful attention, especially if the diversification is considered an investment for tax purposes.
- Commercial Risk Exposure: It’s important to understand the extra risks that come with diversification projects, especially those that draw large crowds, like entertainment venues.
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In essence, making diversification work requires careful planning and smart choices. It’s all about making sure your new ventures fit with your main farming goals and don’t add too much financial or operational stress.
For more advice, get in touch with our team today.
