Like every other business owner in the country, farmers will have been waiting to see how Chancellor Rishi Sunak’s Budget on 3 March would affect them, and the answer is that there were some benefits and some drawbacks. But, on the whole, the response has been favourable.
For example, the extension of business rates relief and the reduced rate of VAT to 5 per cent will help farm businesses recover from the impact of the Coronavirus.
Farm businesses that rely on Covid-19 measures, to support jobs and businesses, will welcome the extension of the furlough scheme to the end of September.
Additionally, the Chancellor announced a new ‘super deduction for companies investing in new plant or machinery assets. This deduction means that from 1 April 2021 until 21 March 2023, companies investing in qualifying assets will benefit from a 130 per cent first-year capital tax allowance.
This upfront super-deduction will allow businesses to cut their tax bill by up to 25p for every £1 they invest, which is potentially a huge incentive for farmers to invest in their businesses, particularly if losses can be carried back three years.
However, big business could be hit hard by the hike in Corporation Tax from 19 per cent to 25 per cent from 2023, when farms with profits of more than £250,000 a year trading as limited companies will be affected. Businesses with profits of £50,000 or less will continue to be taxed at 19 per cent, and a taper will be introduced for those with profits of more than £50,000.
For help and advice on matters relating to the agriculture sector, contact our expert team at Smailes Goldie today.