The Budget this week aimed to stimulate the economy, but what did it offer rural businesses?

David Chismon, Partner, Saffery Champness and head of the firm’s land and rural practice group takes a look at the main features.

The Budget for Growth had to be one to stimulate the economy, drive down inflation and bring people back into the workforce, but what has it been from the perspective of rural and farming business?

By and large the budget saw some measures we welcome, some that are a setback, and some missed opportunities.

What was announced was that a call for evidence and consultation has been launched to explore the taxation of ecosystem service markets and the potential expansion of agricultural property relief from inheritance tax to cover certain types of environmental land management.

This area has raised questions for some time and hopefully this will be the start of the process to remove the uncertainties and discrepancies surrounding this area.

Welcome from a personal finance perspective will be the continuation of the Energy Price Guarantee at £2,500 for a further three months, rising to £3,000 in July, but could more than three months at the lower level have been possible?

Measures to free up parent time, increase of the pension annual tax-free allowance from £40,000 to £60,000 and the abolition of the pensions lifetime allowance from April 2024 may all impact on encouraging more people back into work. But is that enough to fill the numerous vacancies that are holding back the economy?

The increase in corporation tax from 19 per cent to 25 per cent had been flagged in advance with only ten per cent of incorporated businesses predicted to pay the new higher rate. But that will still be a significant blow to those that are affected.

The introduction of ‘full capital expensing’ following cessation of the ‘super deduction’ means that from April 1, 2023, until March 31, 2026, investments made by companies in qualifying plant and machinery will qualify for a 100 per cent first-year allowance for main rate assets with companies able to write off the full cost in the year of investment without any capping. This implies that sole traders and partnerships will have a cap, albeit up to £1m under the Annual Investment Allowance regime.

The freeze on fuel duty for 12 months will also be welcomed, with no RPI increase for fuel in 2023-24 but, that excepted, for unincorporated businesses there was little tangible, leaving little headroom for them for investment, or in meeting rising costs of inputs, or indeed of bringing more people into the rural workforce.

Finally, it should be noted that government is to introduce legislation in the Finance Bill 2023-24 to restrict the scope of Agricultural Property Relief and Woodlands Relief to property in the UK. Property located in the European Economic Area (EEA), the Channel Islands and the Isle of Man will be treated the same as other property located outside the UK. The changes will take effect from April 6, 2024.