Residential property
02 Apr 2019 News

Single Farm Payment – Don’t Miss Out on Capital Losses

When the Single Farm Payment Scheme came to an end on 31 December 2014, farmers in Scotland, Wales and Northern Ireland had an opportunity to crystallise capital losses which could save them significant amounts of capital gains tax in future.  The same is true for Milk Quota which came to an end on 31 March 2015.

Farmers who can secure a capital loss for tax purposes will be able to carry it forward indefinitely and, offset it against any capital gains that might arise in the future - for example, gains arising on the sale of a field to a neighbouring farmer or, perhaps, the sale of a larger area of land for development.

However, not every farmer will be able to benefit from this opportunity.  Only those who purchased or inherited their Single Farm Payment Entitlement or Milk Quota will be in a position to secure a capital loss. 

To take advantage of this opportunity, farmers must notify HMRC of the capital losses they wish to claim by the end of this tax year on 5 April 2019 otherwise they will lose the ability to use these losses in future.  The end of the tax year is fast approaching so farmers will need to act quickly to secure this benefit.

Given the possibility of significant future tax savings, farmers should review how they acquired their former holdings of Single Farm Payment Entitlement and Milk Quota and consider whether they would benefit from submitting a claim for capital losses.  They may need to take advice to help them assess the benefit of making the loss claim and, if they proceed, to quantify the loss and notify HMRC before the deadline expires on 5 April 2019.

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