It is no secret that the COVID pandemic and resulting restrictions on international travel prompted hundreds of farmers and landowners to diversify into the agritourism sector.
From humble pop-up campsites to shepherds huts, lodges, and expensive barn or farm cottage conversions into plush holiday accommodation, for a time it seemed like everyone with an acre or two of land was trying to cash in on the staycation boom.
But now, with the pandemic little more than a distant memory for many of us, has the investment in agritourism continued and does the sector still provide a viable form of diversification?
Whitely Stimpson partner and agricultural tax expert Ian Parker says it does.
At the lower end of the market, a major boost this year has been the permanent extension of Permitted Development Rights from 28 days to 60 days, meaning farm businesses wanting to set up seasonal diversification projects can do so profitability without needing to apply for extra planning permission.
The change was announced in June this year – just in time for the main holiday season – but applies only in England, with Wales and Scotland still adhering to 28 days.
Ian described this as a huge boost for English farmers.
“The impact of extending Permitted Development Rights is just starting to be felt as we come to the end of the summer holiday season,” he said. But early signs show it has been a big success, enabling English farmers and landowners to capitalise on a welcome change to the law.”
Elsewhere, bookings have remained strong as holidaymakers are still opting to explore closer to home than before the pandemic.
“One change we’ve seen among our farming clients who offer holiday accommodation is that people have returned to booking an annual foreign holiday but will chose to have shorter breaks in the UK, often picking tranquil, rural locations. This has benefited glamping and bricks and mortar farm accommodation, which continues to do well even despite the cost of living crisis.”
Complicated Tax Position
However, Ian advised farmers and landowners considering setting up an agritourism project for next year to take advice before proceeding, particularly in relation to tax.
Slip ups in the day-to-day management could be costly, he warned, with issues such as VAT on deposits, understanding in which tax year income should be accounted for, accounting for cancellations, and VAT flat rate vs standard rate, often catching new businesses out.
“All signs point to the fact the staycation is here to stay, and with the current confusion around farm payments it is understandable that agritourism is a very attractive form of diversification for farmers. We would certainly not discourage anyone from going down that route, but would advise that you take proper advice from the start, to ensure everything is set up as well as it can be for success.”
To speak to Ian about setting up a farm holiday business, get in touch on (01295) 270200 or email email@example.com.