But the thing is to have your capital allowances available already from previous jobs to fund it before tax and then the next item paid from cash flow can be carried forward. But you have to be on the treadmill already, so you are always one step ahead of the tax man.
yes very true.. but i doubt if someone with say 200000 gallons storage is going to be increasing storage by just 20,000 gallons... look at GrasstoMilk.. he going doing a tank 180ftx20ftx8ft... thats 180,000 gallons storage... fair going for anyone to pay for that from cashflow...
Shouldn't the government first port of call be to give grants for concrete and drainage on farms to stop water runoff entering slurry tanks . This is a quick fix and would solve alot of slurry storage problems in a short period. After this they should look at capacity
You would assume somebody adding that much storage is expanding, not increasing just to comply with new regs.
We did two tanks 200 x 16 x 9 out of cash flow but did it over a few years. One tank at a time, did first tank year one, put slats on it the following year, did cubicles the 3rd year, put up shed the following year, then next tank and so on.
You keep harping on about not borrowing and building out of cashflow, but I can't see why if it takes you that long to get to the finished product. If you had borrowed the money first day the lower building cost would probably have covered all the loan interest and you would have had a usable building in year one while keeping a good positive bank balance. Also, stop presuming everyone's situation is the same as yours, on a few occasions I've noticed that you expect everyone to do as you do because it works for you.
The thing is you would still have to meet repayments in a year like last year or worse still back when the milk price dropped to 20 cents a litre. We had enough repayments to make having already purchased the 230 acres. If you had seen the wintering unit we put up on that farm and the price it has been completed for.
But every one to their own.
sure if we all had repayments to make on 230 acres, we would all be doing infrastructure work out of cash flow over a period of time but if you're not heavily borrowed it's more beneficial to the farm and one's sanity to get the infrastructure work done through a short-term loan as soon as possible.
Many years ago a wise bank manager advised against short term borrowing for the likes of building or machinery purchase as it burns up your repayment capacity.
Then if an opportunity to for instance buy a piece of land comes up you wont be in a position to secure the necessary finance.
That's all well and good if you are willing to just work away with the same as your daddy left you.
On loan repayments, they're going to be the same per month if milk price is good or bad. My plan is to do the bare repayments in low price years and pay off extra when i can. I thought most others did the same?
But if you finance a project properly and keep a healthy cash flow you will be met with a much more receptive bank manager if the need arises to borrow extra for land. I think one of the biggest regrets most post 2015 expansion farmers have is that we tried to do too much from cashflow. And again, was there any need for that last comment, whether people are happy to stay as they are or buy half the parish is there business.
We all have to see what suits our setup, the scale of the project relative to the amount of cash predicted to be available in the given year would prob determine if done from borrowing or cashflow really. There is prob a figure that could be worked out for each place to determine that if need be, percentage of turnover after costs or whatever in order not to put pressure on things.
Could be argued some did too much last year out of cashflow which then led the tax liability to put pressure on this years cash flow. When budgeting now I try to have the years tax owed there at the start of the year, doesn't always workout that way.
Tax, drawings, wages and to a certain extent contractors, vet, feed costs, etc can be determined at the start of the year with a +/- figure for each to allow a bit of leeway. Again putting a conservative figure in for income side and see what way things are likely looking for the year ahead.
If projects can be done in stages cashflow may do but if it saves on time / labour etc to do it in one borrowing could well be the way to go, the write off will be there either way, well once the profit is made to use it!
We’re loosing a farm that we had storage on it so it has to be replaced now. Was a pain drawing out to it any way so it’ll all be in the one place now
bit of future proofing going on too thsat if they change the slurry produced per cow figure we’ll be okay
built a house between 22 and 23 largely out of cash and it has sucked us dry. Thankfully what’s left to be done on it is largely outside and around it and that can wait a few years
i see what you mean... but christ youd want to be borrowing some amount of money to burn up repayment capacity to such an extent that ya wouldnt be able to purchase land..were ya happy with your few bob from Kerry today??
Got a load of drainage chippings delivered their, women driver mid 20's, local girl who had been relief milking since she was 17, done 2 years in ag collage at dairy herd management, wouldn't be a great sign of things to come re the next generation when after a few years on dairy farms and doing the 2 years in collage, thinking it was going to be a career, a year later goes at the lorries
Important part of the above is 'we' a family dairy business where theirs a couple of sons/father involved is a totally different animal to a one man band, working away by himself, when your largely working alone in the springtime good facilities are needed, and cant really be done in stages of years/when cashflow allows
that is also the hickey business model
only borrow for land, everything else is done out of cash
To save paying tax you have to borrow to kill the tax bill a year like last say youve 100k profit taxed at 50 percent and you build a parlour for 100k you pay 42.5k tax as only 15 k was tax deductable.So if you borrowed 700k and built tanks sheds machinery if you needed them then youve ni tax at 50 perent.The items you borrow for to avoid paying tax must make you money as well as a tax saving eg slurry storage fert value staying compliant avoiding fines.
We have lads buying 200 acre farms and building houses from 2 years cash flow. I'm feeling inadequate! I'm hoping it's cos I have poor land or I'm just a bad farmer!!
Don’t feel bad Kevin, I’ve taken a very modest wage for a long time to build up the farm which in turn impacted us going for a mortgage, we were getting ran through the mill to get a mortgage. in the end we decided to go with out one because we were would have had to spend 50k extra on air to water system, solar panels and mechanical heat recovery to get a high ber so we could get a lower interest rate
Didn’t intend on doing it in 2 years but with the good milk price we put the money into it. We did take 2 personal loans between us aswell
Could one do it over a longer period? Is there a time deadline?
So you built a house from farm profits in 2yrs surely u have a huge tax bill as to generate that surplus tax it has to be pure profit
My neighbour is 10 years building his house 😂
Being nosey, what did yous do with the house yous had done up on the home place?
cslling it a house is probably wrong it’s more so an extension onto an existing house bar a kitchen but it’s a big extension hence why I call it a house
I didn’t pay a builder which probably saved 40-50k and I didn’t put solar panels or air to water in which is a fair saving aswell
I did a lot of labouring myself on it to the block layer, carpenter, putting up plaster boarding etc etc. it didn’t cost me near what others are spending /sq ft.
My neighbour did all the timber work on the house and lots of other bits and pieces and he was very easy to pay
it was pure hardship but I reckon we saved ourselves close on 100k between the major bits and being savvy about building it.
but I never want to build one again, pure hardship to do alongside farming
the building I’m on about was built on to it. House /extension has everything in it bar kitchen which is In existing house. 4 new bedrooms- one un suite, up stairs main bathroom, downstairs toilet, sitting room, utility, office, play room
The first one is the hardest, the blocklayer told me when we built, but you’ll get good at it after you build 2 or 3 he said.
I nearly swung for him 😂
Obviously they've worked hard to achieve what they've done but the economies of scale do come into to it as well, esp when it comes to doing projects out of cashflow
For sure. A few farms fully paid for throwing off lots of cash can get a new one going very quickly
It's not nailed on yet, but if this weather prediction comes to pass, it really will be the icing on the cake re mother nature letting us know she's the boss
Went to oad last few days cows dropped dramatically.
