Mini-Budget tax cuts relieve agricultural sector
To combat the energy crisis and rising inflation, the government has announced a series of tax cuts in its new growth plan which should ease pressures on the agricultural sector.
During his mini-budget announcement on Friday 23rd In September, Chancellor of the Exchequer Kwasi Kwarteng unveiled his new growth plan in response to the cost of living crisis affecting households and businesses across the UK. Along with other economic measures, the plan included the biggest package of tax cuts in half a century, which was welcomed by farm organizations.
Key announcements from the Chancellor included lowering the basic rate of income tax from 20% to 19% in April 2023, which the government says will give 31 million people on average £170 more to take home per year. The abolition of the new 45% income tax rate for high earners was also announced, but this was reversed on 3rd October.
The growth plan also included stamp duty cuts and the cancellation of the 1.25% increase in National Insurance from November. The Chancellor said:[…] The reforms I announced today – the biggest package in generations – send a clear signal that growth is our priority.
With an ambitious 2.5% growth rate in sight, the government has canceled plans to raise corporation tax from 19% to 25% next year, meaning farms trading in as long as limited companies with chargeable profits over £50,000 will not have to pay more tax. .
Easier investment decisions for farmers
Planning for investment in agricultural machinery and plant will also be easier following the Government’s decision to leave the Annual Investment Allowance (AIA) permanently at £1m, rather than reducing it to £200,000 from 31st March. Consequently, agricultural businesses will be able to deduct 100% of eligible installation and machinery costs in the first year.
Commenting on the Chancellor’s announcement regarding the AIA, NFU President Minette Batters said“UK food and farming contributes over £100 billion to the national economy and provides jobs for four million people. Investing in this sector to increase productivity and growth is in the interests of all.
“That is why the announcement that the annual investment allowance will remain permanently at £1m will be good news for many farmers, allowing them to plan and make investment decisions as soon as possible.
“We now need to see this extended to cover buildings and structures to encourage greater investment in agricultural infrastructure, and more detail is needed on other measures outlined in the budget, such as the impact of new investment zones and planning relaxations on rural areas. ”
Jeremy Moody, Secretary and Advisor to the Central Association of Agricultural Assessors (CAAV)also welcomed the announcement: “CAAV spoke to the Treasury about the need for greater stability within AIA, particularly given the uncertainties of today’s supply chains.
“Farmers should be able to make a timely investment for the right reasons, not just to get tax relief, but the difficulty has been knowing when to invest and whether the allowance would be available. A farmer can now decide to invest in milking robots, for example, and not be at risk if they are not delivered by next April,” Moody said.
Sean McCann, Certified Financial Planner at NFU Mutualadded that investors will appreciate the removal of the recent 1.25% tax increase on dividends next April.
Agricultural balance sheet in progress
Mr McCann then highlighted the government’s plans to conduct a review of agricultural productivity, looking at the impact of regulation, investment and innovation on farmers and land managers across the country. England.
“Farmers are hoping this review will result in government support at a time of skyrocketing input costs,” he said.
The NFU also welcomed the news of the upcoming agricultural journal, with President Minette Batters saying the organization is ready to collaborate.
“For these frameworks to be successful, they must be developed with farmers and we look forward to working with ministers to help ensure that agricultural businesses are not only supported in the face of current economic challenges, but are able to take progressive decisions. to stimulate growth and agriculture. contribution to the nation,” said Batters.
CAAV’s Jeremy Moody was also delighted to hear that the government has singled out the agricultural sector as important, alongside digital connectivity and planning.
“I consider this essential after the past 30 years of falling behind competing nations. To ensure a profitable agricultural sector, we must implement the changes that CAAV and the Agricultural Productivity Task Force are working on. I hope we can help the agricultural economy to be much more productive,” he concluded.
For more details on the government’s tax reduction program, visit: GOV.UK | Chancellor announces new growth plan with biggest package of tax cuts in generations