Farming as LTD

Johns3650

At the ploughing next week might try and talk to a few accountants about this.
Read a lot about in the journal with the last few years is it worth the extra hassle and accoutants fees.
Main pluses and cons to it.
I know one problem is having the accounts available on line for anyone to see or so my old man keep saying 😂

Mooooo

Would your own accountant not be the best person to talk with as they would know your situation? There is a lot to consider so it would take time to.thru

Johns3650

Mooooo wrote: »

Would your own accountant not be the best person to talk with as they would know your situation? There is a lot to consider so it would take time to.thru

Without doubt, but I kinda want to get to know more about it before I go and ask. It's probably 4-5 yrs away maybe

If transferring the farm at the same time what happens to BPS. About transfer of shares? Does the old man have to sell the shares getted taxed at 33% and then I've to buy them again?
What happens when you want to wind the company up!

I'm only looking into it at the moment and just trying to further my knowledge on the subject before I get anywhere near the big move if I ever do

Buford T. Justice XIX

Johns3650 wrote: »

Without doubt, but I kinda want to get to know more about it before I go and ask. It's probably 4-5 yrs away maybe

If transferring the farm at the same time what happens to BPS. About transfer of shares? Does the old man have to sell the shares getted taxed at 33% and then I've to buy them again?
What happens when you want to wind the company up!

I'm only looking into it at the moment and just trying to further my knowledge on the subject before I get anywhere near the big move if I ever do

As I understand it, the land and BPS stay together and the company leases the land from the farmer with the BPS. Accounts should be done quarterly. Any tanks being done have to be done by the farmer as any money spent on buildings have to be removeable so sheds qualify but tanks don't under the rules.

Johns3650

Buford T. Justice V wrote: »

As I understand it, the land and BPS stay together and the company leases the land from the farmer with the BPS. Accounts should be done quarterly. Any tanks being done have to be done by the farmer as any money spent on buildings have to be removeable so sheds qualify but tanks don't under the rules.

This is another area that's I find right confusing re buildings. I thought the company owned the parlour and you lease the rest of the yard to the company. Gets complicated when you building after the company is set up which I don't have a great understanding of. Try to maximise the directors loan then in machinery and stock....

alps

Different tax consultants have completely different approaches to how best to set up and operate these companies....

Who is correct....? That's a six million dollar question.

Buford T. Justice XIX

alps wrote: »

Different tax consultants have completely different approaches to how best to set up and operate these companies....

Who is correct....? That's a six million dollar question.

Jaysus, that's a big company you have:D

Dickie10

maybe if your income is over 150 k it might be a good option for tax. i knnow my neighbour began farming under a company name last year for tax, but his sfp is about 120,000

darragh_haven

Dickie10 wrote: »

maybe if your income is over 150 k it might be a good option for tax. i knnow my neighbour began farming under a company name last year for tax, but his sfp is about 120,000

Farming as a ltd company here. Sfp is as close to fcuk all as makes no difference. It made sense as the farm was being transferred to me and i have a full time job, already in high tax bracket.
Why do you think the farm needs to be earning 150k + to be worthwhile to farm as a ltd company?

Water John

150K seems to have been put out there at some stage and now taken as gospel. No idea why? Most small businesses and many service providers use Ltd status.

Rocket Man

If you set the company up as an "unlimited limited company" your accounts won't be available for others to see.

kevthegaff

Problem is taking money out of the company, you will be hit with more tax, as far as I know

Rocket Man

kevthegaff wrote: »

Problem is taking money out of the company, you will be hit with more tax, as far as I know

Directors loans can be taken out tax free.

Bass Reeves

darragh_haven wrote: »

Farming as a ltd company here. Sfp is as close to fcuk all as makes no difference. It made sense as the farm was being transferred to me and i have a full time job, already in high tax bracket.
Why do you think the farm needs to be earning 150k + to be worthwhile to farm as a ltd company?

Rocket Man wrote: »

Directors loans can be taken out tax free.

But loans have to be paid back. The advantage of a LTD is when you have a large excess of cash that you do not want to draw down in the short term. LTD allows you to retain capital within a company structure. However it is not a panacea for solving tax issues.

Taking out directors loans is a short term solution. But they have to be paid back and it is the same as paying any other loan you need the income after tax to pay them back. LTD structure has advantages in that you can employ family members and use both personnel and PAYE tax allowances. However again this is only an advantage as long as that person has no use of those tax allowances. If they need the allowances or part of them for a part time job this negates the value of LTD.

LTD shields money from tax you have to pay the company tax at 12.5% but it is then shielded until you need to draw it down. It would be an advantage in situations where income/profit is vary's to a significant degree over several tax years but the catch is when you want to exit large sums from the company and want to hold on to that money. Some can be drawn down through pension funds but these tax reliefs are available outside of LTD structure.

The reason why people speak about income limits for starting LTD structure is that it is only an advantage to have the structure after yearly personnel drawing are accounted for. Just because you have a PAYE job and pay the high tax rate is not necessarily a reason to jump into such a structure. It is not possible to write off LTD tax losses against personnel income tax like in an unlimited structure.

LTD structure is only viable as long as we have high personnel tax rates and low corporate tax rates. It should also be noted that LTD is a much more onerous accounts system and because of this cost more. It is also worth noting that it is not the shield we all taught it was against personnel bankruptcy due to the demand for personnel guarantees