2020 Budget Review
How will the 2020 Budget Affect the Rural Sectors, Farmers and Landowners?
Much anticipation surrounded the Budget before it was even delivered by new Chancellor of the Exchequer, Rishi Sunak, on 11th March 2020, says Tim Parsons, Director of Compliance.
This was the first budget in over a year, the first budget since the UK departure from the EU, and the first Budget for a strong majority government in quite a while. With coronavirus also presenting both health and financial concerns, it was highly anticipated that the Chancellor would put in measures to address this.
In advance of the Budget, there were concerns across the rural and agricultural sector about agricultural property relief (APR) for inheritance tax, red diesel, entrepreneur’s relief and the impact this would have on farming businesses, succession planning and business resilience.
The Chancellor delivered his Budget and less than a month into the job, he promised big (in some areas) and continued the rhetoric of the Conservatives ‘getting it done’ and delivering their manifesto promises.
Some expected changes such as APR, were not in the Budget. These may have been cut to allow the Treasury to make provision for tackling Covid-19 by pledging £30bn, prioritising health protection and economic security and stability.
Tim is keen to highlight some of the significant changes that will affect the sector:
- Increase to Business Rate Relief - to mitigate against coronavirus the government has pledged increases of 100% to Business Rate relief for small businesses in 2020-2021, with this relief being expanded to the leisure and hospitality sectors. For pubs in England with a rateable value below £100,000 the government pledges a business rate discount of £5000 for one year.
- Red Diesel Tax Relief - agriculture, including horticulture and forestry, will continue to benefit from red diesel tax relief but for most other sectors this will be scrapped from April 2022. Large investment in Research and Development (R&D) of green transport and machinery has been proposed, and as such we would expect further changes to policy going forward. It was encouraging to hear the Chancellor mention the part the NFU has played in raising concerns of farmers and reassuring that the concerns raised have been listened to regarding red diesel.
- Nature for Climate Fund - the Government has pledged £640m for a dedicated fund to invest in peatland restoration and tree planting. The Government already provides grants through Natural England and the Rural Payments Agency (RPA) for tree planting and woodland management, as well as supporting restoration of peatlands through Higher Tier and Higher Level Stewardship schemes on common land and fell ground. We expect these to continue and the fund shows the Government’s commitment to tackling climate change and protecting the environment.
- Entrepreneur’s Relief - the lifetime limit of this relief has been dropped from £10million down to £1 million; the level it was in early April 2010.
- National Insurance – the threshold has been increased to £9,500 (an uplift from £8,362) which will help employees.
- Flood Defence Fund Pledge - a £5.2 billion pledge has been given towards improving and repairing flood defences, including funding to local governments to build resilience. This has great potential to help protect rural communities and we hope that this will be invested wisely to help farmers play a vital part in retaining water to manage catchment responses to high levels of rainfall.
- Structures & Buildings Allowance – there has been an increase to 3% for this allowance.
Tim concludes: “This Budget has not had the full impact on agriculture that we were expecting, as events around coronavirus overtook ‘normal business’.
“However, although it was not as eventful as it could have been, it is a welcome response on balance, given the other issues and challenges currently being faced by the industry. It is possible that future budgets will announce further changes to the sector, but it is hard to say when exactly.”