30 Oct AUTUMN 2018 BUDGET – WHAT DOES IT MEAN FOR FARMERS, LANDOWNERS AND RURAL BUSINESSES
AUTUMN 2018 BUDGET – WHAT DOES IT MEAN FOR FARMERS, LANDOWNERS AND RURAL BUSINESSES
Behind the main media headlines, what are the things to look out for in this year’s autumn budget? Louis Fell looks at some of the things that will impact farmers, landowners and rural businesses;
- Capital Allowances/Annual Investment Allowance has been increased from £200,000 to £1m. This is great if you are currently looking to buy new plant and machinery and to then take advantage of this massive increase to reduce taxable profits. Particularly those that are diversifying or investing in machinery, the timing will be extremely useful. Often parts of a new shed are plant and machinery, particularly for intensive units, so worth considering the tax benefits if alternative systems can be more tax efficient. Word of caution though – make sure you actually need the machinery replacement and not driven solely by the tax position (it may be better to pay the tax!), particularly if you are increasing your level of finance costs to a level that makes cashflow tight.
- Structures and Building Allowance – it is great to see some tax benefit from investing in new buildings (not residential though). You can offset 2% of the cost of a new building against tax for a 50 year period. This should provide some encouragement to invest in buildings for the future, particularly as we move away from direct farm support payments. It is a shame it is not more like 10%, but it is better than nothing and coupled with the AIA increase, for some it will make investment in sheds much more tax efficient
- Entrepreneur’s Relief – the Government have increased the period of qualifying trading from 12 months to 24 months to be able to claim Entrepreneur’s relief. Therefore anyone who had been letting land out under an FBT, for example, and was planning on selling and has been told to trade for a year to then retire and only pay 10% capital gains tax, will now need to trade on the land for 2 years. This just means a bit more planning in advance is required, and make sure you do not get caught out as it is a generous level of tax that perhaps will come under scrutiny in the future.
- Tree Planting – there is going to be more encouragement for planting trees. There is no detail, but it is good to see that they recognise the current system is not working. It would be good if there was an incentive for felling and replanting again, rather than just on virgin land and encourage more active woodland management.
- For those that have diversified and have a retail shop/premise on the estate or farm, then the new reliefs on business rates will be welcome. We fall into this category with our shop and it is very much welcomed. The government forget what a vital role rural retail provides in keeping communities together and providing jobs and employment in the countryside.
If you want to talk through any of the above, please do call Louis on 07770 255639 or send him an email [email protected] or do speak to any of members of the Team and we will be happy to help.