Overhauling tax legislation could increase farm productivity after Brexit, experts suggest

A recent Irish study showed that putting land into the hands of trained farmers increased output by 12%
A recent Irish study showed that putting land into the hands of trained farmers increased output by 12%

Overhauling tax legislation offers a way to promote greater productivity in the farming sector after Brexit, according to the Central Association of Agricultural Valuers.

The discussion paper, produced by agricultural valuers CAAV, explores fiscal packages capable of shaping a "vibrant" farming sector.

The organisation said that some simple changes could make all the difference to the industry.

“Brexit offers the greatest opportunity to determine agricultural policy since 1947, providing the chance to improve the sector that provides much of our food, environment and landscape,” explained Jeremy Moody, secretary and adviser to the CAAV.

“Such a chance to shape our own destiny may not come again.”

The paper offers a review of potential tax measures that could aid agricultural and environmental productivity.

It considers ways to assist entry, progression and exit from farming; innovation and investment; resilience; and the management of risk.

“One of the key factors that needs addressing is access to land,” explained Mr Moody.

This involves freeing up more land for rent, as well as ensuring that land farmed in-hand is passed down to the next generation who will farm it best.

“Agriculture, short of physical investment in recent years, is on the cusp of a major technological revolution,” he added.

“And with many keen and skilled potential entrants, it is at a point where an improved tax system could yield real dividends.”

Increased output

A recent Irish study showed that putting land into the hands of trained farmers increased output by 12%, more than the increase achieved by passing land onto the younger generation.

The successful introduction in Ireland of rent relief from Income Tax, geared to length of tenancy, has encouraged more letting of land over longer time periods.

“We have seen a 30% increase in the number of landlords offering tenancies for five years or more,” said Mr Moody.

“In conjunction with the new Residential Nil Rate Band Amount for Inheritance Tax, giving relief on a home passed down the family, could have a powerful stimulus as a retirement package.”

'Treated equally'

While Government tax policy has favoured companies under Corporation Tax this has left farming’s sole traders and partnerships behind, according to Mr Moody.

He continued: “Businesses should be treated equally for what they do, not discriminated against for the way they are structured.”

Greater investment and innovation will be key to future productivity and resilience, and the CAAV is arguing for the reinstatement of Agricultural Buildings Allowances to encourage such investment.

Mr Moody said: “To help farmers embrace new technologies there should also be a £2.5m capital allowance for automation and digital technologies over five years.”