A low-key Autumn Statement contained a mixture of changes which will affect farm businesses, alongside consultations with longer-term implications.
A challenging economic background and the impact of the decision to leave the EU mean growth rates for the UK economy were revised down for 2017 and 2018.
This will keep pressure on output prices as consumer spending is restricted and the retail price war continues.
The farm wage bill will rise as the national living wage rate moves from £7.20/hour to £7.50/hour in April next year.
Chancellor Philip Hammond announced that next spring’s Budget would be the last and afterwards the Budget would be an autumn event.
“The rescheduling of the main Budget from March to the autumn will in theory provide a more orderly introduction of any future tax changes and reduce the need for last-minute planning before 5 April,” said Peter Griffiths, tax director at accountant Hazlewoods.
Positive moves included freezing fuel duty for the seventh year, estimated to save the average car driver £130/year, more in rural areas
Rural rate relief
An increase in small business rural rate relief from 50% to 100% is worth up to £2,900/year and will help many diversified businesses
Previously announced plans to raise the tax-free personal allowance (currently £11,000) to £11,500 in April 2017 and to £12,500 by the end of this parliament were confirmed.
However insurance premium tax will rise from 10% to 12% from 1 June 2017.
Longer term, there will be more scrutiny of how cash earnings and benefits in kind are taxed – this could have implications for the farming community and tied accommodation in particular.
The differences between tax paid by businesses with different structures are also to be examined.
“The government will consult on ‘fair’ profit sharing in partnerships and on accommodation provided by employers in regard to the valuation of it for benefits in kind.
“Both of these could see changes to the taxation of farmers,” said Rob Hitch of accountant Dodd & Co.
Costs of incorporation
Dan Knight, director of accountant Old Mill said there were references to the costs of incorporation so those considering the future of their business and structure may want to delay making any key decisions until there was more clarity.
On partnerships consultation Mr Knight said any changes would be likely to require businesses to plan in advance and not simply allocate profits after year end when the accounts were prepared.
The government is also to introduce a new 16.5% rate from 1 April 2017 for businesses with limited costs, such as many labour-only businesses, said Carlton Collister of Landtax.
While most farmers did not use flat-rate schemes anyone who did should take advice on this, although the new rules appeared targeted at those with limited costs, for example businesses providing essentially labour-only services.
Mr Collister also pointed out that in January 2017, the government is to publish its response to the Making Tax Digital consultations.
This would be one to watch as it would increase paperwork, he said.
The CLA was disappointed the statement did not offer more for rural areas.
“Rural areas must receive the right proportionate share of spending,” added president Ross Murray.
“The chancellor’s road and rail plans must not lead to economic opportunity hurtling past rural areas.
“We understand why urban projects will receive more funding, but there is little reassurance that there is a strategy to ensure a balance in investment across the country and between rural and urban areas.”