Serving the Farming Industry across East Anglia for 35 Years
• Small measures are partially helpful • Reduction in basic rate tax unveiled • 12-month fuel duty cut announced Chancellor Rishi Sunak’s Spring Statement... Chancellor ‘could have done more’ to ease rural crisis

• Small measures are partially helpful

• Reduction in basic rate tax unveiled

• 12-month fuel duty cut announced

Chancellor Rishi Sunak’s Spring Statement could have gone further to help ease the cost of living crisis in the countryside, say advisers.

Higher prices for fuel, energy, fertiliser and other materials will continue to put pressure on farm incomes – with inflation is expected to average 7.4% this year, says Sean McCann, chartered financial planner at NFU Mutual.

Fuel prices

“The Chancellor had to do something to reduce the impact of soaring fuel prices and cutting fuel duty was always on the cards but the reality is a 5p cut is unlikely to make a material difference with prices so high.”

Fuel duty has been cut from 57.95p to 52.95p per litre for 12 months. But VAT continues to be charged at 20%, which means petrol and white diesel are still double taxed. A proportionate cut is expected to reduce red diesel costs by less than a penny.

“The spiralling cost of petrol and diesel is having a huge impact on farmers who need it to run their businesses. The price of red diesel is roughly double what it was this time last year, impacting food production at a crucial time for farming.”

Mitigating impact

On the £3,000 increase in National Insurance threshold, Mr McCann said: “Raising the thresholds for employees and the self-employed National Insurance by almost £3,000 goes some way to mitigating the impact of the 1.25% rise in April.

“All workers will benefit from this threshold increase, which will cost the government £25.9bn over the next five years, but it will make a real difference to many low earners.

“However, it’s disappointing the Chancellor didn’t go further and delay the hike in National Insurance, which will still hit employees and farm businesses hard at a time when costs for fuel, energy, and fertiliser are all spiralling.

Reducing benefit

Employees and employers can reduce the impact of the 1.25% increase by making a pension contribution though a salary sacrifice arrangement. On the reduction of basic rate Income Tax, Mr McCann said: “The Chancellor’s announcement that he would cut the basic rate of income tax from 20% to 19% in 2024 is a welcome move that will impact millions of people.

“However, the freezing of personal allowance and income tax bands until 2026 will reduce the benefit for many families.”