Agricultural and rural businesses short-changed by the Budget
There was little for the farming community to cheer about from this Spring Budget .The Chancellor has made no big changes and given little away in this Budget, and most farming businesses will be worse off as a result.
A few farm businesses could benefit from the palliatives on business rates, but the reduction in the exempt amount of dividend income, which falls from £5,000 to £2,000 from April 2018, will target many small company owners. In addition, people who are self-employed will see a 2% increase in Class IV National Insurance over the two years from April 2018. With these two measures, the Chancellor wants to ‘level the playing field’ upwards between employees and those running their own businesses, but small business owners could see this as an attack on their livelihoods.
The farming sector is facing further uncertainty and change around tax. We expect further announcements and consultations in the next few weeks, which could add more woe for the sector. These are likely to include a review of partnership taxation, as HMRC has already expressed its unhappiness about the current tax treatment of employer provided accommodation. A number of employee expenses are also being reviewed including rent a room relief. It is highly unlikely that these reviews will lead to a reduction in tax for our sector.
Although we were pleased to hear about the twelve-month deferral of “making tax digital” to be offered to those with turnover below £85,000, this delay isn’t likely to benefit many farms. They will be obliged to make quarterly digital accounts returns from April 2018, and will need to have the correct hardware and software in place by then – software which isn’t yet fully available.
For further information, please contact your usual MHA MacIntyre Hudson contact.