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South Wales Argus
09-08-2025
- Business
- South Wales Argus
The tax implications farmers need to know about the SFS
Its aim is to support Welsh farmers while caring for the environment, adapting to climate change and building resilience to the delivery of public goods and food. The finer details of how the £238m a year budget will be used to achieve these goals have been widely written about, however, what is less known are the tax implications for farmers moving over from the older Basic Payment Scheme. Firstly, farmers who opt to stay in the Basic Payment Scheme will see their payments reduced to 60 per cent of current payment levels in 2026, 40 per cent in 2027, 20 per cent in 2028 and finally zero per cent in 2029. Farmers who choose to participate in SFS from January 1 2026 will surrender their BPS entitlements when they move to the scheme, which would be recorded on their tax returns as a capital loss, and available to set off against any available capital gains in that year, or going forwards. However, those who wish to stay with BPS until its end in 2029, would have to wait until 2029/30 to make a Negligible Value Claim (which results in a capital loss for the taxpayer) instead, as this is the point at which the BPS entitlements would end. Whether a farmer surrenders their BPS entitlements to move to the SFS regime, before BPS ceases in 2029, or they wait for their BPS entitlements to cease to exist in 2029, the end result is a capital loss. The only difference is the procedure to claim the capital loss, and timing of that capital loss, whether it is in the 2025/26 tax year, with the earliest possible surrender of BPS entitlements, or waiting to the end of BPS in 2029/30. Any capital loss could be set against any capital gain in the tax year it arises. If there is no capital gain to set it off against in that tax year, then it can be carried forward to be set against any future capital gains, such as the disposal of an asset. From a tax perspective, farmers need to consider whether it is worth electing for the new Sustainable Farming Scheme in order to crystallise capital losses in 2025/26. If they do not, then the capital losses will not be crystallised until 2029/30. Any capital losses can be set against any capital gains in the same or future tax years. Nick Park is the Director of Cwmbran-based Accountants & Tax Advisors, Green & Co, and a member of the Country Landowners Association (CLA) National Taxation Committee.
South Wales Argus
17-05-2025
- Business
- South Wales Argus
Nick Park on agriculture 'shouldering burden' of tax deal
However, there is a concern that agriculture is shouldering the burden to the benefit of other industries at a time when it is already under pressure. There is widespread worry in particular that the removal of UK tariffs on bioethanol coming into the country could spell disaster for UK production, with US suppliers able to produce and ship cheaper in bulk. While there is currently little-to-no bioethanol production in Wales, it's a renewable energy source for the industry that is regularly cited as having huge commercial potential here, with the country having significant grassland potentially suitable for its production. There are projects underway looking at the viability of extracting and fermenting the sugars from grass to make bioethanol. Any farmers in the region who were exploring this as a potential option may need to keep a close eye on the impact across the rest of the UK. Some good news is that though there has been a relaxing of tariffs on US beef into the UK (and vice versa), UK food standards on imports will remain, meaning no hormone-treated meat on our shelves. What this will mean for Welsh beef or the more than 600 beef and cattle farms in the Gwent region is unclear. However, with Wales seeing a stark rise in production over the last few years (producing 51,300 tonnes in 2023 alone), farmers are again having to hold their breath and see what happens. Overall the only thing certain about this tariff deal is how uncertain it all is - with China already grumbling the deal could compel UK companies to exclude Chinese products from supply chains. Considering that in 2024 China was Wales' second largest import market, and the fastest growing, this could again cause a knock-on effect for our agriculture industry. Add into the mix that this agreement is not an official trade deal - that can only be agreed and ratified by US Congress - so it could be discarded as quickly as it was arranged. Nick Park is the director of Cwmbran-based accountants & tax advisors, Green & Co, and a member of the Country Landowners Association (CLA) National Taxation Committee.
