George Osborne’s reported closing remarks are strikingly relevant to a rural sector in bad need of some pep: If you want to own your own home, help with childcare, start your own business and give someone a job, work hard and get on, we are on your side.
So what was in the budget for farmers, landowners, and rural communities? Here’s an immediate assessment of the key points that will impact on rural life from Jamie Younger, Partner in the Landed Estates and Rural Business Group of UK top 20 accountant Saffery Champness based in Edinburgh and Chairman of Scottish Land & Estates’ Taxation group. He says:
There is a real incentive here for farm businesses to consider their structure and perhaps incorporate following today’s announced cut in Corporation Tax to 20 per cent particularly since the majority of farm businesses are sole traders or partnerships. But incorporation is not for everyone - it’s good for profitable enterprises where some profits can be retained in the business, but there are also increased administration costs.
There are also important tax issues involved with a decision as to whether the farmhouse should be included in the company and appropriate advice should be sought.
Likewise, the ‘generous tax breaks’ to promote early investment in shale gas will benefit landowners and local communities where there is development potential for this new resource.
The new Employment Allowance providing a £2000 cut in the National Insurance payments made by the employer will encourage jobs, and will be good news for small businesses. The increase in the personal allowance to £10,000 will also be universally welcomed.
A cancellation of the planned September fuel duty increase is also good for the rural economy, albeit fuel (alongside feed and fertilizer) will remain one of the three F’s that continue to weigh down farm businesses.
We should also not forget the measures announced last December that will affect landowners and rural businesses: the increase in first year capital allowances to £250,000 which is good news as against the introduction of a cap on loss relief against the tax payers other income (higher of £50,000 and 25 per cent of taxable income).
And not mentioned in today’s speech are measures to restrict deductions against assets for liabilities for inheritance tax purposes which could be bad news.
However, all in all, a reasonable basket of measures for the rural sector – not a huge basket, but generally positive.