Today’s (22 April) Budget by Chancellor Alistair Darling is likely to set out a number of measures to help boost the struggling economy and address the government’s growing budget deficit.
But, aside from any big announcements that affect everyone – such as changes to income tax, VAT, or the like – what will be the main decisions affecting farmers?
Grant Thornton’s Carlton Collister says that potentially one of the biggest issues for farmers is whether the government decides to go ahead with changes to the Agricultural Property Relief rules.
Earlier this year the European Commission requested the UK amend its rules for land that qualifies for inheritance tax relief, to include property outside the UK, as current legislation went against “free movement of capital”. The government said it was likely to make an announcement in April’s budget.
“We’re hoping there won’t be any big change, or the government just extends it [APR] to the rest of the EU,” said Mr Collister. “But, controversially they could get rid of Agricultural Property Relief, which would be a very big story, although I think it’s unlikely.”
Any changes to stamp duty were also likely to affect farmers buying land or property, he said. “Stamp duty is still quite low compared with the Continent, so the government might decide to raise the top rate and put a progressive scale in, rather than existing tiered approach. It might make it easier for those buying small areas of land or cheaper property, but it won’t be good news for those buying larger areas, subject to the higher rate of stamp duty.”
Mr Collister also said there could be some change to capital investment allowances, which could benefit farmers. For the 2008/09 tax year, all businesses have an Annual Investment Allowance on the first £50,000 of expenditure on plant and machinery, but he says this threshold could be increased as the government tries to encourage businesses to invest.
- Mr Darling will deliver his 2009 budget at 1230 BST tomorrow. FWi will keep you up to speed with all the developments and what they mean for farmers.