What will Autumn Statement 2016 bring for farmers?

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Julie Liddle looks ahead to the autumn statement on November 23 and outlines some of the key areas where farmers will be hoping for the chancellor to act to support the sector.

Annual Investment Allowance

In an uncertain economy, this is one area where the chancellor could really give farmers some certainty. We have seen the Annual Investment Allowance (AIA) go from relative peanuts a few years ago up to £500,000, only to see it shrink back to a ‘permanent’ rate of £200,000 in the last budget. Farmers wanting to invest in big-ticket plant and machinery will be hoping the chancellor is generous in increasing the AIA again.

Farm buildings

Knowing how many farmers are wanting to invest in new farm buildings to expand their business, it would be good to see greater tax relief on such infrastructure investment, over and above the relief offered by the AIA. The National Farmers’ Union (NFU) has already called for incentives to stimulate investment in modern buildings, infrastructure and reservoirs to improve long-term productivity and competitiveness for agriculture. Unsurprisingly, this is something we’d wholeheartedly support.

Corporation tax

While the headline rate of corporation tax has been pared back in recent years, the reduction hasn’t been applied to those smaller businesses with profits under £300,000 (that previously paid a much a lower rate) and those majority of farm businesses that are unincorporated. Most farmers will be crying out for something to be done to make this part of the tax system fairer for businesses.

National Insurance

A persistent bugbear of many farmers is the high cost of employers’ National Insurance contributions, a burden which has increased further for many following the introduction of the National Living Wage. Any initiative that would reduce the punitive effects of NICs on farmers would be welcomed.

Diesel prices

Some kind of crackdown on diesel engines is widely expected after a number of recent reports into city centre pollution levels caused by nitrous oxide emissions from diesel cars. This could be in the form a new tax or a rise in fuel duty for diesel engines. Farmers will be hoping this does not unfairly apply to their own diesel 4x4s and pick-ups being used in rural areas. We will have to wait and see, but I expect this is an area where the agri sector could be unfairly penalised.

VAT on tourism-related activity

Successive governments have doggedly resisted any cut to the rate of VAT on tourism-related activity, even in the face of a sustained and vocal campaign by pressure groups. Today’s higher rate of 20% appears to be something we’ve now become accustomed to. However, countries like France continue to demonstrate how a reduction in VAT for tourism-related businesses can boost the rural economy. That said, I think it remains unlikely we’ll see any reduction in VAT.

For more information on any rural land and property issues, call Julie on 01768 254 354.