19th February 2021 In Rural
Budget 2021 and its implications for farming businesses
It’s been a week since the Budget 2021 announcement and, now the dust has settled, Acre’s Sarah Attwood summarises what the implications are for farming businesses.
- 130% first-year capital allowance on qualifying new plant and machinery assets from 1st April 2021 until 31st March 2023, which is good news for businesses buying new tractors and machinery (more information can be found here https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/967202/Super_deduction_factsheet.pdf). For sole traders and partnerships (which 90% of farming businesses are thought to be) the Annual Investment Allowance is more relevant.
- Confirmed freeze on fuel duties. For the second year in a row, there has been speculation about changes to the agricultural exemption for red diesel usage and, for a second year in a row, there has been no change.
- Inheritance tax thresholds frozen until 2026. There will be no changes to Agricultural Property Relief or Business Property Relief as had been feared.
- Alcohol duties frozen, which is great for those diversifying into viticulture (as well as those looking forward to the pubs reopening).
- Confirmed higher rate band for personal tax will not increase with inflation up to 2026. It is thought that 90% of farming businesses are operating as sole traders or partnerships, so they are likely to see an increase in taxation in real terms.
- COVID 19 recovery support. The following COVID 19 support schemes and measures will help support some diversified farming businesses with income streams from hospitality (such as holiday lets, cafes, etc):
- The Coronavirus Job Retention Scheme and Self-Employed Incomes Support Scheme have been extended to September
- Restart Grants of up to £18,000 for hospitality and accommodation businesses
- Reduced VAT at 5% will continue for retail, hospitality and leisure
- Increased rate of Corporation Tax. From 2023 the rate will be 25% instead of 19%. Businesses with profit below £50,000 will continue to pay the 19% rate, but this will gradually increase up to 25% for businesses with over £250,000 profit.