Investment in farm businesses could be kickstarted as part of government efforts to help UK’s the struggling economy.
Chancellor George Osborne unveiled plans to temporarily increase the threshold for the annual investment allowance from £25,000 to £250,000 from 1 January for two years.
The Country Land and Business Association said the move could give farmers greater incentive to invest in farm machinery and renewable energy.
The plans were one of several announced by the Chancellor during his Autumn Statement to House of Commons on Wednesday which could offer some cheer to farmers following a miserable year.
Despite the country’s economic growth being worse than expected, Mr Osborne scrapped the planned 3p/litre fuel duty increase, while the threshold for paying 40% tax was reduced.
Corporation tax was also reduced by 1% and the point at which people pay income tax was increased from £9205 to £9440.
But along with the measures, the Chancellor announced some tougher measures to get government spending back on track.
DEFRA resource budgets will be cut by £55m over the next two years - £20m next year and £35m the year after - to help raise £5bn across Whitehall to fund capital investment in projects such as roads, broadband and research.
The department said it was too early to confirm where cuts would fall, but stressed it represented just 2% of budgets and dwarfed the additional spending it had recently been given to spend on flood defences.
Rural insurer NFU Mutual warned farmers should be cautious about some other measures the chancellor also announced.
The annual tax-free allowance into pensions was cut from £50,000 to £40,000, while the pensions lifetime allowance is cut from £1.5m to £1.25m from 2014.
Sean McCann, NFU Mutual personal finance specialist, said the measures would put pressure on farming families and businesses by restricting the opportunities farmers had to save for their future.
“However, there is an opportunity before 2014 to make the most of tax-efficient savings for retirement,” he added.
The key points:
- Annual investment allowance increased from £25,000 to £250,000 for two years from 1 January
- Planned 3p/litre fuel duty increase scrapped
- Income tax threshold increased to £9440, up from the £9205 announced in the Budget in April
- 40% income tax threshold increased to £42,475 (up from £41,450)
- ISA allowance increased to £11,520. Junior ISA increased to £3720
- Annual tax-free allowance into pensions reduced from £50,000 to £40,000, while the pensions lifetime allowance is cut from £1.5m to £1.25m from 2014
More on this topic
Read a transcript of the Autumn statement webchat