Posted by Sarah Brown on 24 Nov '16
Diversification - is money reason enough?
Lower taxes might raise returns on diversification
It’s a big decision to diversify.
About half of all UK farms already use some form of diversified activity in their farming business according to the government; but they don’t bring in a lot of money on average only £10,400 extra revenue per farm. This might be improved by the Government’s announcement yesterday lowering some rural business rates from 1 April 2017.
Under the current arrangement any shop, pub, post office or petrol station that is the last one in a village of less than 3,000 people and has a rateable value of less than £8,500 qualifies for rural rate relief (RRF). That RRF is set at 50%, and councils have had the option of increasing the relief to 100%. Now under this change every qualifying premises will automatically receive 100% discount on their rate bill.
However other types of rateable rural business such as commercial office space do not qualify for rural rate relief. These businesses do qualify for small business rate relief if the business owns only one qualifying premises and the rateable value is lower than £12,000.
Any business property or land related to agriculture is already exempt from business rates. Of course, the autumn statement also raised some elements including the Living wage and tax on insurance.
Is it your passion and does it fit with your values?
Like any new venture the decision needs to be based both on financial and business forecasts - pessimistic, realistic and optimistic and also on gut feel. Does it feel right, does it reflect what you want to do?
The sure fire recipe for failure is to do something just to make money but it’s not your passion or interest. The reason it will fail is because you will always find other things to do however much you tell yourself you need to do it.
So even if there is now rate relief or even funding (local enterprise partnerships (LEPs) have been awarded £1.8bn for funding aimed specifically at four areas of local infrastructure: to improve transport connections, to unlock house building, to boost skills, and to enhance digital connectivity) so it looks better financially make sure it passes the passion test to ensure long term growth and success.
These blogs also cover issues of passion:
Is the route to success finding your passion and following it? The blog includes details of how a rural business that has diversified has inspired a young person