Accounts & tax treatment of farming for the environment

With the move away from the area-based subsidy regime in the UK such as the basic payment scheme (BPS) to the environmental land management schemes (ELMS) consideration has to be made towards the correct accounts tax and bookkeeping of such receipts.

Spring Budget announcement

The Spring Budget brought the announcement of a consultation on the tax treatment of ELMS for farming including a call for evidence on how the production and sale of ecosystem service units should be taxed aiming to understand the commercial operations of these land uses and areas of uncertainty on income and corporation tax treatment.

One of the key questions is how the tax system should account for the timing difference between upfront payments and ongoing project management and delivery costs.

However it is fair to say that the majority of the focus from farmers and farm...