The Chancellor's decision to allow farmers and growers five years to average their incomes will help many currently struggling in volatile markets, the NFU have said.
Dairy farmers in particular have had a tough time after milk prices crashed 25%, causing farmers to rally for public support and many farming unions issued pleas to the government.
"The government must look after local farmers while we still have them," NFU Shropshire Chairman Richard Yates said in February.
George Osborne said farmers faced a big challenged with falling prices and said the government wanted to help.
NFU President Meurig Raymond said: “We are very pleased that Mr Osborne said that he had listened to the arguments by the NFU and will allow farmers to average their incomes over five years. As he mentioned in his speech, farmers are increasingly facing a volatile marketplace and this will enable them to manage the impacts of this."
“News that the annual investment allowance will be addressed in his Autumn Statement is also welcome. As he mentions, £25,000 is not an acceptable level which would encourage on-farm investment and we will await further announcements with interest.
“The NFU also believes the changes to the ISA system will allow more flexibility in accessing funds without losing the benefits of tax relief; and that our members who supply the drinks industry will also welcome a cut in alcohol duty for cider, beer and spirits. We will also await further detail on how the changes affecting self-assessment tax forms will affect our farmers and growers, particularly given that access to reasonable broadband is an issue for many.
“While we appreciate the need to roll out ultra-fast broadband of up to 1k Mbps throughout the UK, we must not forget those rural communities who have yet to reap the benefits of a decent speed for broadband and might only get a basic legal entitlement of 5 Mbps and subsidised satellite services.
“Like most motorists in the UK, rural communities will also be pleased to see that fuel duty will not rise this year.”
CLA Deputy President Ross Murray said: “This has been a good budget for the rural economy, with important announcements on rural broadband and reform of the compulsory purchase system which will be welcomed by many businesses and people in the countryside.”
On compulsory purchase reform
The Chancellor announced a consultation on reforms for the system of compulsory purchase of property and land for major infrastructure schemes:
Mr Murray said: “Countless families and businesses on the route of HS2 and other infrastructure schemes are currently facing terrible uncertainty and years of business stagnation because of unfairness in the current compulsory purchase system. The announcements in today’s Budget mark a milestone in our long-running campaign for a fairer compulsory purchase system, delivering consultation on important solutions that the CLA has been calling on Government to introduce.
“Earlier payment of compensation to the owners of property or land being taken would enable buildings to be replaced before the current ones are lost – previously rural firms have been facing months or even years without buildings which are critical to their operations, such as silage storage or milking facilities. We are also pleased that the double-standards in interest arrangements that we have seen with HS2 Ltd have been addressed.
“In addition, purchasing authorities – whether that is a local council or a delivery organisation such as HS2 Ltd – would need to take greater account of business disruption when proposing compensation. This flexibility would enable a smoother and faster agreement for all involved and it will reduce wastage of taxpayer funds through protracted appeal processes.
“These are important changes which would make a real difference to the lives of people affected by compulsory purchase. However they are just a few of a raft of updates that are needed to bring the out-dated compulsory purchase system into the twenty first century, and the CLA will continue to campaign for a fairer approach.”
On delivery of rural broadband
The Chancellor announced the Government will look at a new Universal Service Obligation (USO) to support the delivery of broadband in rural areas.
Mr Murray said: “For too long, thousands of businesses in the countryside have been held back by a lack of access to fast, reliable broadband while their urban counterparts have benefited from digital Britain. The CLA has been calling for many years for Government to implement a Universal Service Obligation (USO) on broadband and we are delighted that this has been included in today’s Budget announcements.
“A USO on broadband will ensure faster and more reliable connection for properties in rural areas, providing an important legal guarantee for consumers. It is vital that Government implements this as soon as possible to support a thriving rural economy.
“While we welcome the Government’s intention to look at installing superfast capable satellite services, we are disappointed that there is no concrete plan for delivery set out. This means there will be no immediate relief for the unconnected rural firms struggling to run a modern business in the countryside. We want to see a voucher scheme to offer those living and working in the countryside a grant to buy alternative solutions – the quickest, fairest and most cost-effective solution.”
Pension fund cap
Farmers’ plans to hand over the reins to the next generation could be hit by a cut in the pension life-time allowance, warns leading rural insurer NFU Mutual.
In his Budget speech delivered today, (March 18) Chancellor George Osborne announced a cut in the personal life time pension allowance from £1.2m to £1m from April 2016.
“The reduction in the pension life time allowance to £1m is bad news for farmers who often use self-invested pensions to buy farm land or commercial property often as part of succession planning,” Sean McCann, Chartered Financial Planner at NFU Mutual.
“Despite £1m sounding like a lot of money, this doesn’t just affect the super-rich. A pension pot of £1m is fairly common today for people earning a reasonable income who have put putting money into a pension over a number of years.
“We’re also concerned about the Chancellor’s announcement to review Deeds of Variations. Deeds of Variation are a valuable tool to help farming families change wills up to two years after a death. This makes it possible for the surviving members of the family to alter provisions which can lead to problems passing on the farm to the younger generation.
“They can also rectify anomalies in wills written years ago – so we will be calling for this facility to be kept in place in the consultation announced by the Chancellor,” he added.
Sean welcomed the Chancellor’ announcement that farmers will in futures be able to ‘average’ their income over five years instead of two for tax purposes.
“From one year to another the weather and volatile market prices mean today’s farmers can go from a profit to a big loss,” he said.
“Extending the period farmers can ‘average’ their incomes for tax purposes to five years will help farmers through hard times and make planning more straightforward.”
He welcomed news that the Government is consulting on abolishing Class 2 National Insurance contributions as this would simplify accounting for self-employed farmers.”
Help for savers in the form of flexible ISAs which enable people to take money out and put it back in again during the tax year and tax-free returns on up to £1,000 interest were also welcomed.
“The special Help to Buy ISA for first-time homebuyers is also a welcome measure for the many young people struggling to save enough for a deposit on a home.
“Last year’s Budget heralded much more freedom for pensioners. This will be further extended from 2016 with pensioners able to ‘cash in’ their annuity in exchange for a lump sum instead.
“This is a complicated issue – and it’s good to see that the Government is going to be consulting on how to provide advice to protect vulnerable people.
“All in all, the Chancellor’s measures offer opportunities for individuals and businesses to pay less tax – but as always the devil is in the detail and it’s important that people seek financial advice before taking steps which have a major affect on their investments, pensions and succession plans
