2020 – A Budget for farmers

After decades of watching Budget presentations which ended with a “sting in the tail” one almost felt that Chancellor Rishi Sunak must have lost the back page of his speech whilst on the way to the despatch box.

From an agricultural perspective, hardly a single one of the predicted or feared adverse changes came about. Despite the recommendations of the Office for Tax Simplification, The Institute for Fiscal Studies and the All Party Parliamentary Committee on Inheritance, there was no mention whatsoever of Inheritance Tax (IHT), no review of the interaction between IHGT and Capital Gains Tax (CGT) and no reduction in the relief for red diesel used on farms. The only adverse changes were the immediate reduction in the lifetime allowance for Entrepreneurs’ Relief (ER), and the cancellation of the planned reduction in the Corporation Tax rate, both of which were well flagged. In fact, there was some surprise that ER was retained at all.

On the contrary, several changes will have distinctly positive impacts on agricultural businesses, notably:

  • The increase in Structures and Buildings Allowance (which gives tax relief on capital expenditure on many new buildings) from 2% to 3% for 2020/21
  • The announcement of over £640m for habitat restoration, conservation and tree planting
  • Promised review of the planning system, potentially freeing up land for development
  • 1% increase in the Research and Development tax credit from 1st April 2020 (for limited companies only)
  • Increase in the employment allowance from £3000 to £4000
  • Improvements in the “Time to pay” scheme and changes to the Statutory Sick Pay regime during the Covid-19 outbreak to help small businesses
  • Changes in the pension contribution rules which would  help mitigate Income Tax liabilities in a windfall year
  • Most intriguingly, the promise of a £3000 one off grant for those who have buildings which are subject to business rates but covered by small business rating relief. This would appear to include qualifying holiday lets and small solar projects, as well as farm shops or small diversification projects.

Commenting on the Budget, John Billings, Head of Agricultural and Rural Business, said:

“Looking at these changes, coupled with the benefits which might flow from improvements to the rural road network and broadband coverage, the plethora of innovation grants and the cut in bank base rate of 0.5%, there is very little not to like here for the rural business.”

If you would like more detailed one-to-one advice on any of the issues raised in the Budget, please get in touch or give us a call on 01903 234094.