Tax Changes Will Discourage New Rural Business

Tax experts at the CLA, the rural economy experts, say the Chancellor's response to their concerns about changes to Capital Gains Tax holds little encouragement for the long term investment required in the land based sector.

CLA President, Henry Aubrey-Fletcher said: "Our experts say that the proposed "Entrepreneurs Relief" will not compensate long-term investors or land owners for the loss of the indexation allowance - used to offset inflation between 1982 and the introduction of taper relief in 1998. "

The CLA President said farmers would find it particularly difficult to claim a new relief which would be based upon the old "Retirement Relief".

"The reality is that it can take a long time for a farmer to hand over and fully retire. Retirement relief required the clear cut disposal of a business and made no allowances for the drawn out process that practicality often demands – so this new proposal is going to do nothing to bring about the simplification the Chancellor promised."

He said that the tax system will also discourage new business ventures in the countryside. Owners who let farms to tenants and farmers who let buildings to small businesses will not be able to claim the proposed relief because they are providing business opportunities for others.

"That seems particularly punitive when we have responded to government calls to diversify and increase employment and job opportunities in the countryside," he said.