DAIRY farmers will be aware that the milk quota system is planned to be phased out in 2015.
Most dairy farmers will, at some stage in the past, have purchased at least some of their milk quota.
This cost will have been averaged out over their total quota. With values peaking at over 83p/litre and now worth approximately 0.1p/litre, for those who have not already done so, there is an opportunity to sell quota to establish a capital loss.
This loss can then be carried forward indefinitely to offset any future capital gains.
Andrew Ranson of Stags chartered surveyors, in Cornwall said: “We are doing a number of deals, particularly for dairy farmers who are members of the Co-Op Milk Link which is merging with ARLA.
“Many of these members are now having their capital in this business repaid which is creating a potential capital gains tax liability for them.
“We are crystalising quota losses for them, which in most cases, leaves them with no capital gains tax to pay”.
Mr Ranson advises that farmers should liaise with their accountants to take advantage of this before it is too late.
They will need evidence of the values of their past quota purchases. Mr Ranson points out that whilst there are some accounting provisions to deal with assets with negligible value claims, many accountants we have spoken with have concerns over these provisions and, given the relatively cheap cost of trading quota, are recommending the latter.
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