Budget 2017 – the agricultural perspective

22 November 2017

As those involved in the industry will be well aware, agriculture operates in an environment which is often quite detached from the broader economy. Looking beyond the headline grabbing initiatives on housing, jobs and the NHS and into the finer detailed aspects, this Budget seems reasonably benign for the industry.

On the positive side, whilst the SDLT announcements for first time buyers are of limited relevance, the extension of the chargeable band to £300,000 might help farm reorganisations where residential property is involved, particularly taken in conjunction with some detailed reliefs on inter-spouse transactions which did not appear in the main speech.

In terms of capital taxation, although relatively few farms trade through limited companies, those that do will be sorry to see the freezing of the indexation allowance which could be claimed on capital disposals. From January 2108 no further allowance increases in RPI will be given. For other taxpayers, the proposed acceleration on the payment date of the Capital Gains Tax due on the disposal of “residential property which is not a main residence” has now been deferred one year, so that from April 2020 the CGT on such transactions will fall due thirty days after completion (rather than on 31st January of the following tax year, as is currently the case).

In the longer term, there two are areas which seem likely to attract more attention in future. Legislation will be brought in to attack “disguised remuneration” which, currently, will mainly affect attempts to remunerate employees without paying tax or NIC – probably not a big concern in the world of agriculture except in the rare case where there are regular self-employed “labour only contractors” who are indistinguishable from employees. A consultation has also been announced to examine the whole area of “off payroll working” in the private sector, so we can expect more attention to this area in future.

We can also expect future attention to be focussed on the effectiveness and rationale behind rent-a-room relief, where a “call for evidence” has been confirmed, and yet another consultation on making the taxation of trusts “simpler, fairer and more transparent”. 

Commenting on the Budget, Sarah Dodds, Head of Agriculture & Rural Business remarked:

“On the whole, this is a Budget which is neutral rather than bad. With no changes to Inheritance Tax and only a couple of threats for the future, it could be worse.”

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For further informtion, please contact Sarah Dodds, Head of Agriculture & Rural Business or send us an online enquiry.

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