Eligibility of Agricultural Businesses for the Self-Employed Income Support Scheme

It provides self-employed individuals with a payment of 80% of their average monthly profits, paid in a single instalment covering 3 months, and capped at £7,500.

A claim can be made under the SEISS if they’re a self-employed individual or a member of a partnership and all of the following apply: 

• they traded in the 2018/19 tax year (and submitted their 2019 tax return on or before 23 April 2020)
• they traded in the 2019/20 tax year
• they intend to continue to trade in the 2020/21 tax year
• they carry on a trade which has been adversely affected by coronavirus 

It is the final requirement which requires careful consideration for those whose income is derived from the agricultural sector so as to not make a SEISS claim which could later be repayable and subject to potential penalties.

Below are several areas where the pandemic can be demonstrated to have adversely effected the farm business to support a claim under the SEISS.  It is important to note that ‘adversely’ affected does not simply mean a fall in profits; if you projected an increased profit of 20% but, only enjoyed 10% growth this too should qualify. You will need to keep evidence to support any claim.

Arable

Potatoes

The blanket closure of fish and chip shops and fast food chains, coupled with the drastic reduction in demand from pubs and restaurants, has had a dramatic impact on potato growers. Where growers have found a market, there may still be transportation issues which will limit what has been able to leave the farm.

Malting Barley

When the Prime Minister announced that pubs and restaurants must close for the foreseeable future on 20 March, the demand for beer production slumped and with it the demand for malting barley. The export market for the surplus malting barley is still an option, but the additional logistics costs of transporting this through countries with varying lockdown and travel regulations would be a significant barrier.

The most available market for farms with 2019 harvest malting barley still to sell, and a 2020 harvest to be brought in, would be animal feed, realising a lower price per tonne.

Wheat

The milling wheat supply chain has been largely uninterrupted. The much publicised shortages of flour on supermarket shelves was more down to the huge shift in demand from bulk bags for the baking industry to small bags for the home baking market than any issues at the processing end.

Workforce

In an industry where, prior to the Covid-19 pandemic, mental health issues linked to isolation was a growing concern, the strict social distancing guidelines have had little impact on day-to-day working for some of the agricultural sector.

That isn’t to say that the farm’s workforce cannot be adversely effected by Covid-19. The requirement to self-isolate due to illness in a household could remove key members of not only the farm’s workforce, but those of the producers on whom the farm is reliant.

There is a large test of the UK labour market looming on the horizon with the 2020 harvest, particularly for fruit and vegetable growers. Travel restrictions and the self-isolation rules will create a barrier to imported labour and leave farms short-handed and incurring additional contract costs to bring the harvest in. 

Diversification

This is likely to be the area in which businesses will see the greatest impact, especially those that have diversified into leisure and tourism.

Overview

The continual need for the farming sector to diversify and create new income streams means that the above won’t cover all the areas of your business which have been impacted by Covid-19. With the understanding of all the enterprises run from your farm, your usual Lovewell Blake adviser will be happy to talk through the basis of the claim with you.