It has been confirmed that UK vineyards are included in the new Government proposals to allow farmers to average their income tax over five years.
In the 2015 Budget on 18 March the Government announced it would extend the period over which self-employed farmers can average their profits for Income Tax purposes from two years to five years.
The Wine & Spirits Trade Association picked up the announcement and sought clarification from Defra that the scheme would be available to vineyards. Given the significant cost of starting up a vineyard, the need to take productive agricultural land out of production and the time it takes for vines to become fully productive (approximately seven years), such increased flexibility would offer significant advantages to a nascent industry. At the time of the Budget Defra were unable to confirm that the scheme would be open to vineyards.
WSTA subsequently raised the issue when it wrote to the Chancellor following the election and with the Defra Secretary of State, Liz Truss MP, when WSTA chief executive met her on 11 June.
This was confirmed in a response to written Parliamentary Question 3002 from the chair of the All Party Parliamentary Wine and Spirit Group, Tim Loughton MP, by financial secretary to the Treasury David Gauke MP, that averaging for farmers will be available to farmers, generally, including vineyards.
The measure extends from two to five years the period over which farmers are able to average their income tax. For those planting vines for wine production this means that they will be able to account for the unproductive period when the vines are becoming established once the vines start bearing fruit, which will encourage investment in the growing English wine sector.
Tim Loughton MP says: “I am delighted the Government has confirmed that income tax averaging will apply to UK vineyards and I am thankful to the WSTA for bringing this to my attention. This is a real boost for this blossoming Great British industry which is now taking on some of the best established wines across the world”.
Mark Driver, owner of Rathfinny Estate vineyard comments: “Planting vines requires a significant capital outlay as well as effectively taking profitable agricultural land out of production while the vines become established. By allowing vineyards to average their income tax out over a number of years, it will really help to offset those tough years with the good ones and ensure that vineyards can plan for the long term”.
Miles Beale, chief executive of the Wine and Spirit Trade Association adds: “This is a major boost for the English wine sector and we are thankful to Tim Loughton for his efforts to obtain this confirmation. Supporting growers that face significant ups and downs will help to ensure the health of vineyards across the UK. We will now be making sure that all eligible vineyards are aware of the benefits of this scheme.”
6 July 2015 - Felicity Murray The Drinks Report, editor