Budget tax increase ‘a bombshell’ to farming businesses

Rural businesses face higher tax bills following the Chancellor’s decision to raise the tax rate on small businesses, accountants Saffery Champness has warned.

In his budget speech on Wednesday, Mr Brown announced the tax rate on small companies would be increased by 3% over the next two years.

Mike Harrison, partner in the landed estates group at Saffery Champness, said this was a “bombshell” for farms and rural businesses.

“This tax rise will apply to all businesses within companies with profits of less than £300,000,” he said.

“Most will now find themselves facing a much higher tax bill.”

Mr Harrison said the Chancellor had tried to “soften the blow” by extending increased first-year capital allowances for business who invest in machinery for another year.

But with few farming businesses regularly buying expensive machinery, it would do little to “lighten the burden” of increased taxation.

Mr Harrison also expressed concern over the withdrawal of Agricultural Buildings Allowances.

“This relief used to be worth up to 4% of the cost of the property,” he said.

“Its elimination will come as a further disappointment to any rural businesses with qualifying property assets.”

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