NFU warns tax credit changes will hit smaller farmers

Farmers claiming tax credits to top up their household income will be hit particularly hard by proposed changes to the system, the NFU has warned.

In a letter to chancellor George Osborne, union president Meurig Raymond said more attention should be given to the potential effect of the proposed cuts to tax credits on the self-employed.

“The proposed cuts to tax credits from next April could have an effect on farmers who have already seen their profits reduce significantly,” he said.

See also: Farm leaders call for flexibility over tax averaging

“We understand you are considering how to mitigate the effect. We would ask you to give particular consideration to the self-employed, as they will not benefit from the increase in the national living wage to compensate.”

The letter was written ahead of the Autumn Statement, which the chancellor is due to deliver on 25 November.

It highlighted how many farmers are suffering cashflow difficulties this year because of falling commodity prices and a drop in the value of the basic payment due to the strength of sterling against the euro.

The NFU said extending the carryback period for trading losses from 12 to 26 months would “substantially assist” farmers dealing with short-term cashflow difficulties.

It also suggested the Treasury consider extending the agricultural investment allowance tax relief so it covers investment in business infrastructure, as well as plant and machinery.

The letter also recommended a delay in the implementation of the national living wage to give farm businesses more time to adapt.

Large horticultural growers were particularly concerned about its introduction as they were locked into long-term contracts, so were unable to pass on the higher labour costs to their customers, it said.

See more