Farmers have set out concerns about the new National Living Wage on employment costs and the lack of action to reduce tax on small rural businesses in the Chancellor's Budget.
The Country Land and Business Association said it was concerned about the 'inflationary pressure' related to the living wage.
"As a result of this Budget farmers and other rural businesses are presented with significant inflation in their wage costs and the cut in corporation tax that is supposed to pay for it will not benefit them," said CLA President Henry Robinson.
"We now need an urgent plan for how to ensure rural businesses are not left behind and jobs in rural communities are not put at risk.
"The Chancellor stated in the Budget that the new compulsory National Living Wage will be paid for by decreases in corporation tax. There are hundreds of thousands of family businesses in rural England and Wales that are unincorporated and therefore are taxed on higher tax rates."
Rural areas exemption from Right to Buy
Ministers must exempt homes in rural communities from new Right to Buy powers or risk a catastrophic drop in affordable homes for local people, says the CLA.
The organisation, which represents landowners, farmers and rural businesses in England and Wales, made the call in response to the Chancellor’s Budget speech today.
CLA President Henry Robinson said: “The housing crisis is most acute across rural England and Wales. Extending Right to Buy to Housing Association tenants would turn a challenging situation into a catastrophe and it is vital Ministers put in place a specific exemption from the policy for homes in rural communities.
“Across the countryside there are landowners that want to provide land for affordable housing, they understand that this means selling it at less than market value for this purpose. They will not do this if they know the homes will eventually be sold off into the open market and not kept for those in most need within their communities.
“In order to retain and deliver new homes that are desperately needed in rural areas, Government needs to develop a rural-specific housing strategy that tackles the major barriers such as slow and inconsistent adoption of local plans. We will work with Government to ensure that well designed rural homes are delivered in the right places.”
Annual Investment Allowance
NFU chief economist Gail Soutar said: “We are pleased that the Chancellor announced that he would be setting the Annual Investment Allowance permanently at £200,000. The NFU highlighted the need for the government to set a long term, substantial level for AIA in our manifesto in order to give some security to our farmers and growers who can better plan for the future by investing in their businesses – which is particularly important during these volatile times. Unfortunately the current capital allowances system does not fully reflect the full cost of investment for farmers. We had hoped to see some progress on buildings and fixed structures that are considered wasting assets. Similarly reductions in corporation tax will have a limited impact on the 92.5% of farm businesses that are sole traders and partnerships.
“Like many people across the country, our members will be relieved that fuel duty will remain frozen for the remainder of the year.
“There were several other announcements made today that we will need to explore in further detail.”
Policy uncertainty?
ADBA’s Chief Executive, Charlotte Morton, commented: “Despite addressing the need to secure Britain’s future – both in terms of financial and national security – there was no reference to the importance of food and energy security, or the need to support green industry to drive economic growth.
“While ADBA’s latest market report demonstrates that the number of biomethane plants has tripled between 2014 and 2015, there are unlikely to be any new biomethane plants without signalling an extension to the RHI budget beyond March 2016.
“Without additional biomethane capacity the AD industry will be unable to contribute to the EU Renewable Energy Directive target of 12 per cent heat from renewable sources by 2020. Home grown green gas can potentially meet as much as 30 per cent of the UK's domestic gas demand - reducing our dependence on imported natural gas from Qatar and Russia - or fuel around 80 per cent of heavy goods vehicles (HGVs).
“By announcing an overhaul of the Vehicle Excise Duty (VED), the Chancellor may be signalling an end to the system which was designed to promote low carbon vehicles.
“To support operators and investors to generate storable, low carbon gas, the Chancellor of the Exchequer’s Autumn Statement must provide the policy certainty that will encourage continued growth by extending the RHI beyond next year.”
Recent analysis by the Green Alliance suggests that government spending reductions will disproportionately affect DECC, reducing its resource budget by up to 90 per cent. DECC needs to be properly resourced to ensure the UK has sufficient low carbon, renewable energy to meet both our needs and the climate change targets all the leading political leaders signed up to prior to the election.
Business Tax
"As expected, Annual Investment Allowance will fall from the current figure of £500,000 p.a. to a new permanent limit of £200,000 p.a., so where major capital expenditure is planned, farmers should ideally accelerate it to before 31st December and take advice on the transitional rules, since timing is important.
"Farmers Averaging was not mentioned in the Budget speech but a 26 page consultation on how five year averaging might work was issued later the same day. Two potential methods were illustrated, both of which will give rise to complex calculations."
Personal Tax
"A major reform of the way that tax is paid on company dividends was announced by the Chancellor. Previously these had not given rise to a tax charge for basic rate taxpayers. From April 2016, there will be a £5,000 individual exemption and dividends will then be charged at 7.5%, 32.5% or 38.1% depending on the income of the recipient. Farmers need to review profit extraction policies for family companies and consider splitting shareholdings to maximise the value of the individual exemption."
Inheritance Tax
"As expected, an additional allowance of £100,000 will be introduced from April 2017 where a residence is passed on death (but only where it passes to a direct descendant). The relief will rise to £175,000 by 2020/21 and thereafter will be index linked. It will taper away where the net estate is over £2,000,000, but helpfully it will still be available when an individual downsizes their home and assets of the equivalent value are passed on to descendants.
"The proposals look quite complex but they may at least reduce the interest which HMRC have recently shown in farmhouses.
"Farmers need to review wills and inheritance tax plans to ensure the relief is not wasted (e.g. by leaving the house to an indirect descendant)."
