2018-03-16 |
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Plenty of Change Ahead for Rural Businesses
Last week’s Spring Statement may not have been full of headlines, but there are plenty of changes ahead for farmers and rural businesses, according to accountant Old Mill.
“Whether it’s a reduction in business rates, taxes on red diesel, relaxed planning permission regulations or tightening of Inheritance Tax relief, there is potentially a lot in the pipeline,” says Victoria Paley, manager at Old Mill.
Victoria Paley
On some topics, chancellor Philip Hammond was clear: As the self-proclaimed ‘champions of small businesses and the entrepreneur’ the Tories have pledged to continue reducing business rates by bringing forward revaluations. “While farmers are usually exempt from business rates, those who have diversified often find themselves hit hard by these extra costs,” says Miss Paley. “Any move to encourage rural businesses is to be applauded.”
However, other trends are less predictable. “Mr Hammond highlighted that the Government could use the tax system to improve the environment,” explains Miss Paley. “For example, the Government will consider whether tax relief for the non-agricultural use of red diesel contributes to poor air quality. It could be that in future it uses the tax system more to drive the behaviours it wants – for example by rewarding environmentally friendly farming practices through tax relief.”
Behind the scenes, Inheritance Tax reliefs are also being heavily reviewed. “Rumours of changes to Agricultural Property Relief have been rumbling for many years now, but at Old Mill we are seeing increasing scrutiny by HMRC into claims, so this autumn could well be the date that changes are announced.”
Ahead of the Spring Statement, landowners will have welcomed housing minister Dominic Raab’s announcement to extend permitted development rights. Set to come into force on 6 April, this means farmers can create up to five new homes from existing agricultural buildings, and will also be able to build larger agricultural buildings – up to 1000m2 – without full planning permission. In addition, Mr Raab extended the temporary permitted development right for changing storage and distribution buildings to residential use, to 10 June 2019.
“In a further positive move for those in need of – or creating – rural housing, Oliver Letwin MP is investigating the disparity between planning permissions granted and housing completions, with a view to closing the gap and increasing housing supply,” says Miss Paley. “A full report is expected in the Autumn Budget and any resulting policy changes could increase incentives and demand for potential development sites.”
With so much in the pipeline, farmers and landowners should review their business and succession plans now, to make the most of the options available, she adds. “Whether you’re capitalising on permitted development rights or concerned about changes to Inheritance Tax, it’s vital to plan ahead to ensure any restructure is done in the most tax-efficient way possible.”
