Budget 2020: A first glance at its impace on farming
Budget 2020: A first glance at its impact on farming
If you listened carefully this afternoon, you would have heard a collective sigh of relief across the countryside in Great Britain as Chancellor, Rishi Sunak, announced that red diesel tax relief will be abolished, but not for agriculture, rail, fishing and domestic heating.
As the first Budget for some considerable time from a government with a significant majority, reports and rumours were rife that farmers would be the losers in the 2020 Budget, with inheritance tax and red diesel tax relief being firmly in the spotlight.
Red Diesel Tax Relief
Of the £2.4 billion that the government gives as a rebate though the red diesel tax relief, only 7% is to agriculture. Abolishing the tax relief for red diesel would have meant that farmers paying around £0.50 p/litre for red diesel would find themselves paying around £1.00 p/litre. The impact upon farmers and contractors would have been significant at a time when many are feeling the impact of an autumn and winter of adverse weather conditions and uncertainty over Brexit and how that could affect exports.
It is no wonder that the farming community felt that this would have sent a message about the government and how they intended to support agriculture at this time, or not as the case may have been. Whilst there are increasingly electric alternatives for vehicles such as cars and buses, the first electric tractors, telehandlers and combines are things of the distant future. Although, the uncertainty leading up to this budget may encourage more research and investment in this area.
Whilst there are some industries which are going to feel the impact of red diesel tax relief, farming has dodged it this time round.
Agricultural Property Relief
Similarly, there were reports of Agricultural Property Relief being scrapped in the 2020 budget too. This tax relief allows farmers to pass on their property without inheritance tax, with the current relief rate being 100%. Opinions differed, with some saying that getting rid of APR would tear asset rich but income poor farming businesses apart. Others suggested that those actively farming would be eligible for Business Property Relief and it would only really impact those who are letting land out. Once again, these fears were unfounded as no changes to APR were announced by Rishi Sunak this lunchtime.
Coronavirus, Broadband and 4G
The treasury has also vowed to foot the sick pay bill of any businesses under 250 employees caused by coronavirus, although they stopped short of extending this to self-employed workers, which many farmers are. Instead there will be a £500m boost to the benefits system and a £500m hardship fund for local authorities, in the hope that this will scoop up any self-employed workers who have to self-isolate. There were also promises to invest £5billion to roll out high-speed broadband and 4G to remote areas, which, if achieved, would have a significant positive impact on farming businesses.
Upon first inspection, the 2020 Budget appears to be largely favourable to farmers, but this may be the straw that broke the camel’s back that triggers the race to the first viable non-diesel alternatives to agricultural machinery. Plus, we can all celebrate with a pint or glass of wine at no extra cost, as duties have been frozen on them too!