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Consider All Aspects When Planning For Plant and Machinery Investment Written By: Oliver Lee The budget announcement in March confirmed that the Annual Investment Allowance (AIA) for businesses would be doubled to £500,000 from April 2014. The current thinking from the Chancellor is that this AIA level will remain in place until 1st January 2016. Upon first impression this sounds like good news for farm businesses planning to invest in plant and machinery — for many it will provide a useful allowance in reducing exposure to tax. However, it will be vital for operators of businesses to ensure that any plant and machinery investment is influenced by business need and not just tax management alone. The wrong investment decision by a farm business (usually plant and machinery) invariably leads to an increased cost of production for the given enterprise. The perceived benefit of improved operations that the investment brings is outweighed by the on-cost of the investment itself (running costs, repairs, insurance and depreciation). We would al ways recommend that some key questions are considered prior to any investment in plant and machinery: Does the business really need to replace or add additional plant and machinery? Can the same or similar equipment be hired in or leased? Can a different way of working mean the investment is not needed? Does the business have the scale of operations to fully utilise the proposed plant or machinery? What is the financial impact (aside from tax benefits) of the investment in the next 1, 2 and 3 years? Will the initial investment trigger the need for further investments in other equipment and if so, what will the impact on the business be with multiple investments? UK agriculture could not operate without continued investment in plant and machinery, but investment needs to be considered as part of wider business planning and not tax management alone. Tel: 07855 282285 Email: olee@theandersonscentre.co.uk Exploring Succession Opportunities For Young Farmers In Wales Written By: Kerry Jerman Succession can be a difficult subject to bring up in conversation around a family dinner table. However, openly discussing this and planning ahead for the future of your farm business can prevent future family conflicts and can enable your business to carry on moving forward. The Young Entrants Support Scheme (YESS) in Wales introduces an excellent point of discussion on this subject and can help young farmers in Wales move to the forefront of the business they are already actively involved in. The YESS scheme is aimed at Young Farmers (under 40 years of age) who are looking to set up as the Head of Holding for their business or have done so within the last 12 months. The scheme offers grant aid intervention of 50% of capital expenditure, or £15,000 (whichever is the lower figure). This capital grant is available to cover expenses for entrants when they set up as Head of Holding for the first time. Additional mentoring is also available through the scheme from established farmers. To be eligible for the scheme the applicant must: Be under 40 years of age on the day the application is made. Have sufficient skills to prove competence as a farmer. Become Head of Holding of the business. The YESS scheme is also available to young farmers setting up their own farm business for the first time. Expressions of interest opened on 1st March 2014 although the application window is 1st September — 30th November 2014. More information on the YESS scheme is available on the link below: http://wales.gov.uk/topics/environmentcountryside/farmingandcountryside/farming/schemes/youngentrantsupportschemeyess/? lang=en Tel: 07838 591799 Email: kjerman@theandersonscentre.co.uk
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