Spring budget 2024: Key updates at a glance
6th March 2024
Jeremy Hunt’s spring budget, released today (6th March) has received mixed reviews so far from farming organisations. We take a look at some of the key points for farmers and landowners…
The chancellor began his financial update this afternoon by noting the impact of the financial crisis, the pandemic, and the energy shock caused by the Russian invasion of Ukraine. While interest rates remain high, Mr Hunt said: “We can now help families […] with permanent cuts in taxation”.
Key points for agriculture:
Agricultural Property Relief
The existing scope of Agricultural Property Relief (APR) will be extended from 6th April 2025 to land managed under an environmental agreement with, or on behalf of, the UK government, devolved administrations, public bodies, local authorities, or approved responsible bodies.
The government also pledged to establish a joint HM Treasury and HMRC working group with industry representatives, to help provide clarity on the tax treatment of ecosystem service markets.
NFU president Tom Bradshaw welcomed the extension of APR to land in ELM schemes, as it will give farmers more choice about how to use their land, and remove a barrier of entry for a number of businesses.
However, it appears the relief will also apply to other environmental land use and could impact the level of productive farmland being removed from agricultural use.
It could also incentivise owners to take land out of farm business tenancies and private investors to purchase land to enter into environmental schemes. The NFU said it will be look closely at any impact assessment.
Agricultural funding
In 2024, there will be £427 million of government funding crowding in additional private sector investment, to support investment in agricultural productivity and innovation.
The government is also providing £75 million to Internal Drainage Boards to bolster investment in water and flood management assets to protect agricultural land from the impact of floods and storms.
READ MORE: Thousands of wellies on display at Senedd in protest of SFS policy proposals
Inheritance tax
From 1st April 2024, personal representatives of estates will no longer need to have sought commercial loans to pay inheritance tax before applying to obtain a “grant on credit” from HMRC.
The government also announced its intention to move to a residence-based regime for inheritance tax and will consult in due course on the best way to achieve this. No changes will take effect before 6th April 2025.
Holiday lets
The Furnished Holiday Lettings tax regime is being abolished to ‘level the playing field between short-term and long-term lets’.
Country Land and Business Association president, Victoria Vyvyan, said the move would stifle businesses that create jobs in the rural economy.
“By converting unused or underutilised properties, that may not be suitable as homes in the private rented sector, into high-quality holiday accommodations, property owners contribute to the local community’s economic vitality. Targeting them will not help solve the housing crisis.
“The current tax rules for Furnished Holiday Lets provide a crucial support mechanism, strengthening the resilience and viability of many farms and rural businesses that in turn enables them to invest in their work looking after the environment and feeding the nation. Abolishing the tax relief shows a disregard for small rural businesses that often have narrow margins and face a constant need to reinvest.”
READ MORE : What does the ‘Clarkson clause’ mean for farmers?
Martyn Dobinson, a partner at Saffery, said the announcement was “certainly a blow”.
He added: “The relief applies to qualifying furnished properties that are available for short term holiday letting and gives owners access to CGT reliefs such as rollover and gift relief, as well as capital allowances on qualifying furniture, equipment and fixtures, and a full deduction against income for related financing costs.
“Profits from FHLs also count as earnings for pension saving purposes. The impact of this change for property owners who were relying on FHL properties and businesses being classed as trading for Inheritance Tax (IHT) planning purposes, remains to be seen. Draft legislation is promised in due course.”
Capital Gains Tax
The higher rate of Capital Gains Tax (CGT) on residential property was also reduced from 28% to 24%, which Mr Dobinson said is clearly intended to bring more residential property onto the market and encourage the sale of second homes.
“That’s fine when a second home is held as an investment, but when they form a vital part of a diversified working rural business already pressured by rising costs and uncertainty around future agricultural support, this may pose more of a problem.”
National Insurance
The government is cutting the main rate of employee National Insurance by 2p from 10% to 8% from 6th April 2024.
A further 2p will be cut from the main rate of self-employed National Insurance.
Alcohol duty
The alcohol duty freeze was extended from 1st August 2024 until 1st February 2025.
WineGB welcomed the news but said it was disappointing that the government had not taken the opportunity to “correct the changes it made to the wine duty system, which impose significant additional cost and bureaucracy on English and Welsh wine,” said Nicola Bates, CEO of WineGB.
“We need the regulatory burden reduced, so small businesses can get relief, and we should introduce cellar door support; to better encourage wine tourism.
“Unfortunately, this Budget hasn’t addressed these omissions in the recently changed duty system. As such domestic wine producers are at a disadvantage compared to their overseas counterparts who receive more favourable terms from their governments.”
READ MORE : Fruit & Vine news
Multiple Dwellings Relief abolished
From 1st June 2024, Multiple Dwellings Relief, a bulk purchase relief in the Stamp Duty Land Tax regime in England and Northern Ireland, will be abolished. Property transactions with contracts that were exchanged on or before 6th March 2024 will continue to benefit from the relief regardless of when they complete, as will any other purchases that are completed before 1st June 2024.
The government said it will engage with the agricultural industry to identify particular impacts that should be considered further.
High Income Child Benefit Charge
Plans were announced to administer the High Income Child Benefit Charge on a household rather than individual basis by April 2026. The government will consult in due course. The threshold will also be raised to £60,000.
To have your opinion heard, email editorial@farmersguide.co.uk.
Read more business news.
