I also don't think I've seen a single challenge to the "I only earn £12k a year on my £3m+ asset" but somehow can invest £100-300k+ in a combine harvester. Growing magic money trees?

November 25, 2024 - 17:12 UTC

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www.bing.com/search?q=poor+poor+farmer+lyrics&qs=n&form=QBRE&sp=-1&lq=0&pq=poor+poor+farmer+lyrics&sc=0-23&sk=&cvid=3FE7AFF97F984BAE86993520ACA7F106&ghsh=0&ghacc=0&ghpl=
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I don't necessarily mean to come out to bat for farmers, but these are not mutually exclusive. If they have equipment ok finance leases or purchased outright, they'll be recognising it as an asset an depreciating it over its life. The cost of which will be one of the expenses in getting to that £12k
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Think most looking in from outside (opinions aside) can see that people taking home less than the state pension, despite huge assets and spending huge sums on equipment they have no hope of paying off, are either terrible at financial planning or tax planning very carefully
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They don’t pay tax on business expenses (like any self employed) so they can buy £150k tractors, SUVs and the like - and appear poor. They lead very highly subsidised lives. Nothing necessarily wrong with that, we need farmers, but the “only earn £13k a year” thing is BS.
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Or that there is no logic in the land being a £3m asset if it only earns 12k. Its worth a lot less if this is the residual income
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Quite, either the land is worth less so IHT doesn't apply, or the true income is much higher.
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I doubt many of those machines that cost in the £100,000 are ' bought ' most likely they are leased and when people say ' well the machinery alone is worth £xm - the reality is the farm owns 0 equity in plant and change in ownership of the farm would just require changing name on lease agreement.
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I'd picked the purchasing argument from an RFI PR piece in the Guardian, I agree though that the reality is they are probably doing very efficient lease deals amp.theguardian.com/environment/2024/nov/23/sitting-with-their-head-in-their-hands-farm-equipment-suppliers-fear-for-impact-of-budget
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Massive farming equipment is usually leased or jointly owned by several neighbouring larger farms. You'd have to be an idiot, or eye-wateringly wealthy, to buy a combine, for example, that can cost north of £250,000, and would basically sit in a barn for 50+ wks in the year.
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I'm not sure quite how it works, but I've been advised that there are significant grants available for farm machinery. I imagine if you know how the system works you could fund quite a lot under the heading of 'productivity'... defrafarming.blog.gov.uk/2024/03/12/grants-available-in-2024/
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To avoid being classed as a "hobby farm" by HMRC, a farm only has to make a £1 profit every 6 years. It can make a loss for 5 years as long as it makes a profit in the sixth.
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