No HLCAcuts relief in forum Budget verdict
By Philip Clarke
IMMEDIATE reaction to the Budget at this weeks Smithfield FarmTech special forum was that it was a "conservative" one.
There was all round relief that there had been no cut in hill livestock compensatory allowances. "With income figures showing a slow recovery in upland areas, the fear was that the government might seek further cuts," said NFU chief economist, John Malcolm.
As such, payments in the severely disadvantaged areas will be £47.50/head for cows, £5.75 for hardy ewes and £3 for other ewes. In the Disadvantaged Areas, cows will get £23.75 and ewes £2.44, subject to green £ changes.
Of the general measures to help small businesses, three were singled out by the forum panel to be of particular assistance to farmers:
• Reducing the age at which a farmer qualifies for capital gains tax retirement relief from 55 to 50 will help those wishing to quit the industry. At 100% relief for the first £250,000 and 50% for the next £750,000, this measure may be especially helpful for farmers with milk quota to dispose of.
• Cutting the rate of company tax to 24% will help reduce the overall tax burden at a time when many farms are making good profits.
• Increasing the threshold for inheritance tax relief will ease the arrangements for succession.
On this last point, the panel recognised that most agricultural land already qualifies for relief. "But it will now be possible to pass on other assets to children not involved in the farm business without being hit by tax," said NatWests Brian Montgomery.
One of the surprises, he added, was that the Chancellor had not also cut interest rates. Like other speakers on the panel, he was confident this would come soon.
This would give a further boost to land prices, predicted Jim Ward of Savills. Even without it, land prices were set to be 90% higher next year than in 1992.
Given the Chancellors cautious approach to tax cuts, most of the panel anticipated a strengthening of sterling and with it the danger of green £ revaluations (which could llower Brussels subsidies).
This expectation has proved ill-founded, however, with sterling weakening on Wednesday (Nov 29) as markets anticipated the impending cut in interest rates.
Other measures taken in the Budget include a 5% cap on rates increases for small businesses in 1996/97, and more details of the landfill tax from next October. This has been set at £7/t for regular waste and £2 for inert waste.
From left to right, Geoff Burgess, William Raymond (Grant Thornton), John Malcolm (NFU), Stephen Howe (FW Editor), Brian Montgomery (NatWest Bank), David Bolton (Andersons) and Jim Ward (Savills) give their Budget reactions at Smithfield FarmTech on Tuesday.