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Farms with diversified enterprises are set to benefit from changes to business rates announced in the autumn Budget. Budget gives boost to farm diversification

Farms with diversified enterprises are set to benefit from changes to business rates announced in the autumn Budget.

In a Budget designed to kick-start a post-Covid recovery, Chancellor Rishi Sunak confirmed a 50% business rates discount for the retail, hospitality, and leisure sectors in England in 2022-23 – up to a maximum of £110,000

Jonathan Armitage, head of farming at business consultants Strutt & Parker, said: “Changes to business rates in the leisure and hospitality sector may also be helpful to rural businesses with diversified enterprises.”

A £1m extension of the Annual Investment Allowance extension (AIA) until 31 March 2023 would also benefit farmers, said Mr Armitage. It would encourage investment which would help put farms on a stable footing, he said. 

“This is good news for farming businesses given they are currently facing a number of difficult challenges – including rising input costs, labour shortages and significant changes in agricultural and environmental policy. 

“The ability to claim 100% tax relief on qualifying plant and machinery does at least help to support investment, which is likely to be required as part of a strategy to develop robust, sustainable businesses for the future.

Saving tax should not be the driving factor in making investment decisions within a farming business, said Mr Armitage. But he added: “It is a very useful tool where capital expenditure is being planned.”

NFU farm specialist Chris Walsh said farmers planning to diversify could be encouraged to take the plunge by the one-year 50% business rates discount for retail, hospitality and leisure sectors.

But smaller farms may find themselves better off using the already-available Small Business Rates Relief, said Mr Walsh. Further incentives – including Green Investment Relief – could encourage farmers to adopt green tech like solar panels.

No major changes

There were no major changes to the tax regime. The only change to Capital Gains Tax was an extension to the time pay tax due on gains from residential property from 30 days to 60 days.

Mr Walsh said: “Capital Gains Tax rates was not aligned to Income Tax as feared, and there was no change to the way it relates to estates that have already benefited from Agricultural and Business Property Relief. 

Richard Playfair, of Saffery Champness, said farmers could stood to benefit from planned spending of £20bn on research and development by 2024-25 – with an announcement that tax relief for qualifying R&D will be restricted to UK activity.

Mr Playfair added: “I would hope that a portion of this funding will filter down to research and development, innovation and new thinking in the agri-tech sector.”

For more on professional services, read 90 acres of farmland for sale near Thaxted, Essex.