George Osborne’s summer budget on July 8 was the Conservative Party’s first full budget in almost 20 years and it contained a few genuine surprises.
This included measures likely to have some impact on farmers and landowners, some positive and some potentially negative. Here’s a quick summary of the main changes:
1. Changes to inheritance tax
The inheritance tax threshold is going to rise through the introduction of an additional nil-rate band that will allow married couples and civil partners to pass on homes with a value up to £1m to their children or grandchildren without incurring any inheritance tax liability. The changes are not due to come in until April 2020, but they could have an impact on the non-agricultural value of farmhouses.
2. Changes to Annual Investment Allowance
The rate at which businesses can invest in new plant and machinery and qualify for 100 per cent tax relief is to be set at £200,000 from January 2016. It had been due to fall back to £25,000 and so the chancellor billed it as a permanent increase in the Annual Investment Allowance. However, compared to the rate it’s been at for the last few years (£500,000 between April 2014 and December 2015 and £250,000 between January 2013 and April 2014), it may actually feel like a permanent decrease. That said, it should probably be billed as a positive step that will bring greater certainty for those looking to invest.
3. Removal of Climate Change Levy exemption for renewables projects
Another budget measure that could impact farmers and landowners are the government’s plans to raise taxes on electricity from renewables, which some experts are warning will hit revenues on many projects and force some schemes into loss.
George Osborne announced that the Climate Change Levy (CCL) tax exemption for renewable electricity generators would be scrapped from 1 August 2015. The move affects new and existing projects and means generators will no longer receive Levy Exemption Certificate (LEC) payments, which are worth about 0.5p/kWh or £5/MWh. This could impact those farming businesses with wind turbines, anaerobic digestion facilities or biogas projects.
If you would like to know more about how the summer budget changes might impact on your property or business, please call Julie Liddle on 01768 254 354.