Change tax to help enterprise
RURAL business advisers have urged Chancellor Gordon Brown to help regenerate the rural economy in his pre-Budget report later this month.
The Institute of Chartered Accountants Farming and Rural Business Group has recommended changes to the tax system to aid development of rural enterprises.
"Many rural businesses are fighting for their lives," says chairman Aubrey Davies. "Their long-term survival depends on new incentives to encourage investment."
The FRBG wants the Chancellor to remove restrictions on the Enterprise Investment Scheme. This provides 20% relief on income tax and capital gains tax exemption to encourage investment in small companies, but excludes activities relating to farming, land and property.
The group also was a revision of the definition of "business assets" for the purposes of inheritance tax and capital gains tax. Currently, letting out farm buildings for alternative uses means owners lose out on IHT relief and CGT rollover and holdover relief. Income is also treated as non-farm income, meaning profits cannot be offset against farm losses.
A further tax change that would benefit the countrysides balance sheet would be a zero rate on VAT for the conversion of farm buildings for residential use, says Mr Davies.
"We are calling on the Chancellor to use his next budget to create a favourable environment in which rural enterprise can flourish." *