Spring Budget: Pension changes will help farmers plan for succession

The government has abolished the limit to how much can be accumulated in pensions over a lifetime
The government has abolished the limit to how much can be accumulated in pensions over a lifetime

Pension changes announced today will help farmers plan for succession, NFU Mutual has said in response to the Chancellor’s Spring Budget.

Jeremy Hunt, Chancellor of the Exchequer, unveiled the contents of his first Budget in the House of Commons earlier today (15 March).

Pensions and tax

• Pension lifetime allowance abolished

• Pension annual allowance increased from £40,000 to £60,000 from April

• No changes to frozen income tax thresholds

Sean McCann, chartered financial planner at NFU Mutual, said he welcomed the decision to abolish the limit to how much can be accumulated in pensions over a lifetime, as it will help farming families plan for succession.

He said: “Pensions provide an independent source of income in later life separate from the farm, which makes it easier for farmers to gradually step away and hand over more of the day to day management to the next generation.

“Pensions are also normally free from inheritance tax, and many farmers use them as a tax efficient way to build up funds that can be left to non-farming children.

“Farmers will also benefit from the increase in the amount they can save in a pension each year tax free," Mr McCann said.

“Elsewhere, it was disappointing to see the Chancellor leave income tax and child benefit tax thresholds frozen until 2028.

"With inflation still raging, these stealth taxes will leave many people with less money in their pockets in real terms.”

Fuel, childcare, and alcohol

• Fuel duty frozen at reduced rate for further year

• Energy Price Guarantee extended extra three months until June

• Childcare support could help farming families

• Freeze on draught beer duty in pubs

Chris Walsh, farm specialist at NFU Mutual, said he was pleased to see the Chancellor freeze fuel duty at its reduced rate for another year.

Farmers and rural communities rely more heavily on fuel than their urban counterparts, whether that is using red diesel for agricultural work, or white diesel and petrol for transporting produce around the countryside.

Mr Walsh said: “The £200 million fund announced to repair damaged roads may help fix potholes which are seriously affecting those driving on rural roads.

“It was also welcome news to see the energy price guarantee extended for three months, as households in rural areas had a higher fuel poverty rate (15.9%) last year than those in towns and cities and rural households are on average, less energy efficient."

He added: "The new measure by the Chancellor which will see most parents get up to 30 hours of funded childcare for nine-month-olds to two-year olds, is good news for farmers with young children, provided there are local nurseries offering places.

“The freeze on draught beer duty in pubs will give some confidence to farmers and growers who have diversified their businesses to produce alcoholic draught drinks and those who grow crops to support the rural pub industry.

"However, non-draught alcohol duty will still be uprated by inflation in August, which could put pressure on the UK’s growing wine sector.”