This week's Budget has been almost universally condemned in the mainstream media.
The Telegraph, clearly no friends of New Labour, described the increase in top-rate tax to 50% as "a return to class war", while The Guardian, generally more chummy with Gordon Brown's government, spoke of "Labour's last gasp".
Certainly the "bigger picture" stuff does leave you wondering. The Chancellor's forecasts for economic recovery look massively over-optimistic, while his policy to "tax and spend" our way out of recession is a gamble.
Time will tell whether he has got it spectacularly wrong or made the best of a bad job, though no one seems very optimistic.
But within the world of agriculture, there are undoubtedly more positives than negatives to emerge from the acres of small print that always accompany the Chancellor's speech.
The key positives are as follows:
• Capital allowances will double to 40% for this financial year only. The first £50,000 of any new investment can already be set against tax under the Annual Investment Allowance. But 40% of spending above that level on plant and machinery can also be claimed against tax. Sole traders, partners and farming companies can apply
• Agricultural Property Relief is being extended to the whole of the European Economic Area. Until now, farmers could only claim this relief from 40% Inheritance Tax on agricultural property in the UK. But this is now being extended to property held in the EEA
• Enhanced loss relief is being extended for two years. This means any trading losses made in 2008/09 or 2009/10 can be offset against profits made in the three previous years and used to claim a tax rebate
• The situation regarding VAT and farm rents has been clarified. It had been feared that, since VAT was cut from 17.5% to 15% last December, this could constitute a "change in rent". As such, rents on AHA tenancies could not have then been reviewed for another three years. The Budget confirms that this will not be the case
• Other more general positives include the decision to increase the maximum amount that can be saved tax free in ISAs to £10,200, an increase in the Capital Gains Tax threshold to £10,100 and the introduction of a £10m grant scheme for anaerobic digesters and composting machines
• The £2000 "scrappage" scheme for cars over ten years old should also have an "agricultural relevance"
Then there are the negatives:
• Fuel duty is going up by 2p/litre from 1 September, on top of the 2p/litre rise this month, with a further 1p/litre increase lined up for the next four years. This will hit rural dwellers the most
• The duty on red diesel is also due to go up 0.38p/litre on 1 September, taking it to 10.8p/litre
There are other positives and negatives contained in the Budget - though the move to increase income tax for those earning over £150,000 a year will have only limited relevance to agriculture.
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The Revenue did not comment on the inheritance tax treatment of furnished holiday lets in April's Budget, just income tax and capital gains tax.
However, the Revenue amended their internal manuals in November last year to note that in the past they thought that inheritance tax business property relief would normally be available where:
∙ the lettings were short term, and
∙ the owner, either himself or through an agent such as a relative, was substantially involved with the holidaymakers in terms of their activities on and from the premises.
The Revenue changed this as advice from the Solicitor's Office has caused them to reconsider their approach and it may well be that some cases that might have previously qualified should not have done so. In particular the Revenue will be looking more closely at the level and type of services, rather than who provided them.
There may be further detail once the Finance Bill is amended, but as this change comes in from 2010, this year's bill may only cover the extension of relief to the European Economic Area (EEA).
Thanks for the clarification - glad someone understands it fully!