'Budget 2016: A budget that should benefit rural business'

What effectively is George Osborne’s fourth Budget in 12 months has brought a number of changes that will be of benefit to rural business, says Chartered Accountants Saffery Champness.

Particularly, smaller businesses and the self-employed.

Below are some of the main points of interest for the rural economy and rural business.

Fuel duty

By freezing fuel duty the Chancellor has delivered again, and those living and working in the countryside will breathe a sigh of relief.

Stamp Duty Land Tax (SDLT)

We now have the rules confirmed for SDLT on the sale of non-residential property with effect from 17 March 2016.

This has now moved to a slice system similar to that in place for residential property.

The new rates and tax bands will be 0% for the portion of the transaction value up to £150,000; 2% between £150,001 and £250,000, and 5% above £250,000.

Stamp duty rates for leasehold rent transactions will also change, with a new 2% stamp duty rate on leases with a net present value over £5 million.

Reduction of Capital Gains Tax by 8 per cent

Capital gains tax has been reduced by 8 per cent in the higher band from 28% to 20%, and in the lower band from 18% to 10%.

The Chancellor has however placed an 8% surcharge on capital gains from residential property, such as second homes.

On the back of this it is unlikely that we will see the rush to cash in by selling such properties as had been forecast.

Changes to Corporation Tax

The continuing reduction in Corporation Tax rates, to hit 17% by 2020, will be welcomed by all businesses, although for some they would have wished to see that change come sooner.

Business rates

Likewise, the abolition of rates for businesses below the new lower threshold of £12,000, raised from £6,000, a tapered relief between £12,001 and £15,000, and a higher rate from £51,000, raised from £18,000, should provide an incentive for small and medium sized businesses to invest and expand.

Abolition of Class 2 NICs and personal allowance

The abolition of Class 2 NIC payments from April 2018 for those who are self-employed will be a bonus for many rural workers and contractors.

An increased personal allowance (to £11,500 from April 2017) and a raising of the top level 40% tax threshold to £45,000 (also from April 2017) will also be welcomed.

Averaging

The rules on averaging of profits for farming enterprises have been expanded, now allowing a choice for averaging over either two or five year periods.

This will bring additional flexibility to the sector as well as some consistency to those businesses that are at the mercy of the markets, price and the weather as to whether they have a good year, or not.

Flood protection

The figure of an additional £700 million for flood defence, and investment in physical infrastructure to prevent damage from flooding, will be targeted at specific vulnerable regions.

The sting in the tail however is the source of funding for this move – a 0.5% rise in the standard rate of insurance premium tax.