Farmers across Shropshire could be missing a trick when it comes to traditional outbuildings on their land.
But as much as old buildings could prove to be an asset financially, they can also be a real headache in terms of tax.
Mark Griffiths, Director of Agriculture at Dyke Yaxley Chartered Accountants, in Shrewsbury, said 30 or 40 years ago, old buildings were being bulldozed as they were too much trouble to keep up.
“But with the advent of barn conversions, what was a millstone quickly became a valuable asset – although the actual value differs greatly depending on the building’s location.”
Mark said the property value would depend on accessibility, how close the barn was to the working farm, and cash constraints.
“There is no easy answer when it comes to deciding what’s the best thing to do with your traditional farm buildings, so it’s vital that you take all tax and financial considerations into account before you make up your mind.”
He said farmers might decide to sell the buildings – either with or without planning permission to convert them.
“If you do choose to sell with planning permission already obtained, bear in mind that this will cost you time and money to secure.”
Some farmers may leave the buildings to fall down, which may be cheaper in the short term, but it could prove more difficult to obtain planning permission later on – others may take a holding position and patch up the buildings as they go along so they can be used as part of the farm for now.
“You may also want to keep the buildings and develop them as residential properties, or develop for commercial use.
“But whatever you decide, all the options have tax implications, so before you start, think about how your plans will be affected – this is an area where getting it wrong can be very expensive.”
Mark said any sales would involve capital gains tax, although they could give farmers the chance to claim entrepreneurs’ relief; developing or restoring the property would have VAT implications; and income tax will be relevant if the property is developed or rented out.
Mark Griffiths, Director of Agriculture at Dyke Yaxley