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Budget reaction: How the Chancellor's Autumn Budget will affect farming businesses

Minimum wage to rise further than expected, a missed opportunity to fix the ’broken’ business rates system and welcome boost to broadband.

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BUDGET REACTION: How the Chancellor's Autumn Budget will effect farming businesses

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Farming organisations have welcomed moves in the Chancellor’s Autumn Budget to introduce a new Structures and Buildings Allowance for non-residential structures and investment into full-fibre internet in rural areas.


But there were concerns over the impact of minimum wage rises and a criticism of the failure to fix the ‘broken business rates system’ which has caused concern for many rural businesses.

Rural Broadband


NFU president Minette Batters said she was pleased to see a significant £200m investment in piloting new solutions to deploy full fibre internet in rural locations.


“It is vital that this is not a one-off investment and it must be part of a continued effort to deliver better connectivity for all rural businesses.


“According to the latest NFU survey, 59% of farmers felt the broadband speed they received was insufficient for their business.


“We hope that this investment in the National Productivity Investment Fund will be used to address the digital divide between the countryside and urban areas.”


The CLA said the Chancellor was prioritising connecting the countryside ‘like never before’.


CLA President Tim Breitmeyer said: “Digital connectivity is vital to boosting rural economic growth and this funding will go towards projects which should lead to the deployment of full fibre broadband in the hardest to reach areas.


“However, although this is very welcome cash for rural broadband, the Government has still missed an opportunity to incorporate 4G mobile connectivity into its plans to improve rural economic growth.


“Mobile network operators have abandoned the countryside by failing to resolve poor signal and not-spots.


“Introducing a single rural mobile phone network to deliver better and faster 4G coverage would prove the Government is serious about its ambition to connect the countryside.”


The Chancellor announced a rise in the National Living Wage to £8.21/hour from April 2019, a bigger rise than many were expecting.


Mrs Batters said: “The announcement today that the National Living Wage will increase by 4.9 per cent is substantially more than the sector expected and comes at a time when farm businesses are faced with a rising cost base. We will continue to engage with the Low Pay Commission on this issue.


Tim Price, rural affairs specialist at NFU Mutual, said: “Minimum wage increases of 4.9 per cent will be hard for farmers to absorb at a time of tightening belts in agriculture and the food chain."

Business Rates


The Chancellor announced reliefs for small retailers on business rates, but the CLA said it was not only high streets which were feeling the impact of the ‘clumsy and unfair rates system’.


Mr Breitmeyer said: “All small businesses need rates relief, especially as they gear up for the uncertainty of Brexit, but the Government has failed to recognise the equally pressing needs of small rural businesses.


“The Government must carry out a fundamental review of the broken business rates system before the next revaluation in 2021.”


Association of Accounting Technicians (AAT) welcomed the announcement but said the issue was far from resolved.


Phil Hall, AAT head of public affairs and public policy said the system was becoming increasingly difficult to defend.


“Expensive tweaks and tinkering at the edges have already cost £12bn of taxpayers money since 2016 and the further reforms announced today demonstrate this has become an annual event for the Chancellor.


“AAT would like to see fundamental reform of the broken rates system to consider not just its inherent unfairness but changes in business models and the competitive advantage gained by online competitors who are able to avoid such business taxes.”


It said there were numerous alternatives available which it would like to see properly considered.


The Chancellor announced the Government would introduce a new Structures and Buildings Allowance for non-residential structures, which the NFU said would help farmers invest in modern efficient buildings.


“The NFU also welcomes the increase to the Annual Investment Allowance to £1m but we are disappointed it is time-limited for two years,” Ms Batters said.


Fuel duty was also frozen for the ninth successive year, and thresholds on VAT will remain as they are for at least two more years.


Duties on beer, cider and spirits were also frozen in response for calls to support British pubs.


Peter Harker, partner at Saffery Champness added: “Entrepreneurs’ Relief has been retained, but its maximum qualifying relief period extended from 12 months to two years which, whilst well intended to avoid abuse, to some will now make ER less easy to access for some genuine cases.


“Increasing the Annual Investment Allowance from £200,000 to £1m will be broadly welcomed as will the new Structures and Buildings Allowance (SBA) for new non-residential structures and buildings with relief provided on eligible construction costs incurred on or after 29 October 2018 at an annual rate of two percent on a straight line basis.


“Of rural interest is the Woodland Carbon Guarantee Scheme with £60m set aside to encourage the planting of trees in England as offset against carbon emissions, but the discontinuation of capital allowances from 2020 for energy and water efficient equipment could cause some need to rethink among some rural clients.”



James Del Mar, executive director of Rural Solutions said across the UK more and more people want to live, work and enjoy the countryside so being able to develop housing and commercial premises was the cornerstone of growth.


“We continue to work with pragmatism to view previously developed land in the rural economy as sites suitable for sensitive and stunning homes for the future, there are circumstances when this should include farmyards.


“The theme of ‘social wellbeing’ is important to ensure that businesses and families can remain connected and develop within all settings, including the countryside – location should not be a barrier to prosperity – and new towns are not always the right answer – sensitive, well planned and delivered additions to rural settlements will facilitate a continually strengthening rural society.


“In addition, we welcome the commitment to continuing to evolve the planning process which, in our experience, is better placed now to deliver appropriate development, that process needs to continue to grow.”


Zena Hanks, partner at Saffery Champness, said: “There have been a number of measures to encourage housebuilding which will impact on the release of rural land – for instance the housing infrastructure fund to ‘unlock’ a further 650,000 homes, and a consultation on simplifying the conversion of former commercial properties, which presumably will apply to former agricultural buildings, into residential new homes.


“On the buyer side, extending Stamp Duty Land Tax (SDLT) relief for first time buyers up to £500,000 for shared equity purchases will be welcome.


“Also on property, however, it is proposed that the limiting of PPR lettings relief to property owners who are in shared occupancy with a tenant, will in effect remove most of the advantages that this relief has to date provided.


“In another change from April 2020 the final period of ownership that attracts exemption from CGT will be reduced from 18 months to 9 months.”

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