Today’s Spring Budget had to be one to stimulate the economy, drive down inflation and bring people back into the workforce, but what has it been from the perspective of rural and farming businesses?
By and large, some of the announcements are very welcome, some are a setback, and there are some missed opportunities.
What was announced was a call for evidence and consultation that has been launched to explore the taxation of ecosystem service markets, and the potential expansion of Agricultural Property Relief (APR) from inheritance tax (IHT), to cover certain types of environmental land management.
This area has raised questions for some time and hopefully this will be the start of the process to remove the uncertainties and discrepancies surrounding this area.
From a personal finance perspective is the continuation of the Energy Price Guarantee at £2,500 for a further three months, rising to £3,000 in July, but could more than three months at the lower level have been possible?
Measures to free-up parent time, increase the pension annual tax-free allowance from £40,000 to £60,000, and the abolition of the pensions lifetime allowance from April 2024 may all impact encouraging people back into work. But is that enough to fill the numerous vacancies that are holding back the economy?
The increase in corporation tax from 19% to 25% had been flagged in advance with only 10% of incorporated businesses predicted to pay the new higher rate. But that will still be a significant blow to those that are affected.
The introduction of ‘full capital expensing’ following cessation of the ‘super-deduction’ means that from 1 April 2023 until 31 March 2026, investments made by companies in qualifying plant and machinery will qualify for a 100% first-year allowance for main rate assets with companies able to write-off the full cost in the year of investment without any capping. This implies that sole traders and partnerships will have a cap, albeit up to £1 million under the Annual Investment Allowance (AIA) regime.
The freeze on fuel duty for 12 months will also be welcomed, with no RPI increase for fuel in 2023-24. But, for unincorporated businesses there wasn’t much, leaving little headroom for them for investment, or in meeting rising costs of inputs, or indeed bringing more people into the rural sector workforce.
Finally, it should be noted that the government is to introduce legislation in the Finance Bill 2023-24 to restrict the scope of APR and Woodlands Relief to property in the UK. Property located in the European Economic Area (EEA), the Channel Islands and the Isle of Man will be treated the same as other property located outside the UK. The changes will take effect from 6 April 2024.
For more information on any of the announcements mentioned, please get in touch with your usual Saffery contact, or speak to David Chismon.