Budget 2015 - H&H Land and Property review budget in brief

Tim Parsons, Director of H&H Land and Property considers how the announcements unveiled from the Summer Budget 2015 in the House of Commons by the Chancellor of the Exchequer, may affect farmers and landowners.

One of the key points to come out of the budget was the changes to Inheritance Tax. The measure announced will introduce an additional nil-rate band when a residence is passed on death to a direct descendant. For landowners with property this would mean that anyone with children or grandchildren will benefit from an additional non-rate band, meaning that the amount of assets able to be passed on free of inheritance tax will increase to £500,000 in April 2020. In the case of a married couple, and as with the current nil-rate band, any unused amount will be passed onto a spouse. The combining of all the exemptions will mean that by 2020 a married couple will not pay any inheritance tax on properties with a value of £1 million or below.

Commenting Tim Parsons said: “We are interested to see how the rules will interact in respect of Inheritance Tax, and the impact this will have on the non-agricultural value of farmhouses, which the revenue has targeted over recent years.”

Undoubtedly the leading news from the Summer Budget is the announcement of a new National Living Wage. Programmed to be introduced in 2017, it will be set a t £7.20 per hour and increased to over £9.00 by 2020. Potentially this will affect many businesses, including farmers and other unincorporated rural businesses, presenting them with significant inflation in their wage costs. The cut in corporation tax to 19% in 2017 and 18% in 2020, will without question help those businesses operating in a company structure but it does beg the question about partnerships and sole traders, who won’t benefit from off-setting the cut in corporation tax, and how they will cover their increased costs.

With the maximum amount of the Annual Investment Allowance being temporarily increased from April 2014 until the 31st December 2015 with plans to return it to £25,000 after this time, a measure has been introduced to permanently increase the amount of the Annual Investment Allowance to £200,000 from 1st January 2016. This permanent increase together with the tax benefits that come from the investment in plant and machinery will allow businesses greater levels of certainty of how much they are able to invest before tax.

The statement that the insurance premium tax is set to increase by 4.5% does raise concerns for farmers who will feel the impact of this rise through their insurance bills.

Possibly affecting farming clients in terms of works being undertaken on or near farming land is the announcement that the government is to create a new Roads fund with plans to produce a second Roads Investment Strategy for the period 2020 – 2025. This is aimed to help fund the building and maintenance of roads and the creation of new road networks across England and Wales.

Summarising, Tim Parsons comments: “It will be interesting to see how the Chancellor’s Summer Budget will affect both farmers and landowners overall, and if any financial benefits will be gleaned from the governments financial economic review.”