Autumn Budget 2021 has some relevance for rural business

27 Oct 2021

credit card and big ben

The Chancellor was at pains today to make this a Budget with seemingly something for everyone. Against a backdrop of unprecedented support from government for businesses and taxpayers through the Covid-19 pandemic, the numbers in terms of jobs, unemployment, and the economy were positive, excepting the inevitable spectre of rising inflation.

Martyn Dobinson, partner at Saffery Champness, and a member of the firm’s Landed Estates and Rural Business Group, commented:

“Across the board there were a lot of positive messages – increased spending on childcare and education, skills and research, healthcare, infrastructure and ‘levelling up’. Also announced well ahead of today was the increase in the National Living Wage to £9.50/hour, a rise of 6.6%, from April 2022.

“And from a rural perspective there were a few surprises, not least the very welcome extension of the £1 million Annual Investment Allowance (AIA) through to March 2023. The AIA allows a full deduction for the first £1 million of qualifying capital expenditure from taxable profits. Writing down allowances (WDAs) are then claimed on any expenditure in excess of this limit. This is in addition to the super-deduction for companies, introduced in March which also runs to 31 March 2023.

“Also, the UK rural sector stands to benefit from planned spending on research and development (R&D), of £20 billion by 2024-25, with an announcement that tax relief for qualifying R&D will be restricted to UK activity. I would hope that a portion of this funding will filter down to research and development, innovation and new thinking in the agri-tech sector.

“There will also be benefit for diversified farm businesses with leisure sector income streams – accommodation, restaurants and cafes, and visitor attractions – with the announcement that these should benefit from a 50% discount in business rates in England (up to a maximum of £110,000). This is in addition to a 12-month holiday on increased rates for businesses investing in their properties.

“No rise in fuel duty will also be welcomed.

“This, of course, is in addition to the previously announced headlines of

  • The new Health and Social Care Levy of 1.25% from April 2022, which will initially be collected in the form of additional National Insurance contributions from employees, employers and the self-employed, and based on earnings;
  • The 1.25% increase in the rate of income tax on dividend income, again, from April 2022; and
  • The deferral of Making Tax Digital for Income Tax Self-Assessment until April 2024.

“Finally, the simplification of alcohol duty should also have knock-on effects for sections of the agri-sector and rural communities. Encouraging small craft producers, and a duty regime that supports, rather than penalises, home grown wine and cider, and the village pub are all good news and a little light froth for the economy in what are still very difficult times.”