“Few benefits” for farmers in Chancellor Hunt’s Autumn Statement

In an attempt to balance the books and raise funds for government spending, Chancellor Hunt made a number of adjustments to the current tax system, most of which will come into effect from April 2023.

Sean McCann, chartered financial planner at NFU Mutual, offered his insights on some of the new tax measures and what they mean for farmers.

“The Chancellor’s main Income Tax change was to reduce the point the additional 45% rate becomes payable from £150,000 to £125,140 from April 2023, which is expected to raise £3.7bn over the next five years.

“Jeremy Hunt froze the tax-free personal allowance and the thresholds for paying 40% income tax and child benefit tax for an extra two years until 2028, which means more people will be dragged into paying higher rates of tax as incomes increase,” Mr McCann explained.

He suggested those now moving into higher tax bands or falling under the child benefit tax charge should pay more into pensions to reduce taxable income and minimise financial loss.

Regarding the changes targeting recipients of dividends and gains, Mr McCann said: “The Chancellor is halving the annual tax-free Dividend Tax Allowance from £2,000 to £1,000 next year and then halving it again to £500 in 2024 in a move which will raise the government £3bn over the next five years.

“This will impact those farmers who trade as limited companies and pay themselves via dividends.

“Slashing the annual exemption for Capital Gains Tax from £12,300 to £6,000 next year and £3,000 in 2024 will raise £1.6bn over the next six years. This could impact farmers selling farmland or agricultural property that has increased in value since they acquired it.

“However, there has been no change to the Capital Gains Tax reliefs available which will be welcome news for many farmers,” he added.

Similarly, no changes have been announced to Agricultural or Business Property Relief, which can reduce inheritance tax for farmers. However, the Chancellor did freeze inheritance tax thresholds until 2028, which means more families will be caught in the net, Mr McCann said.

Commenting on the Chancellor’s announcement on energy support, Chris Walsh, farm specialist at NFU Mutual, said: “Doubling the energy support to £200 for families who use heating oil, liquified petroleum gas, coal or biomass this winter is one of the few benefits for farmers and rural people in the Chancellor’s Statement.

“However, these payments will only go a small way to offset increased costs,” he noted.

“Businesses facing huge electricity and gas costs, in particular glasshouse growers and horticultural businesses, will be interested in the details of the new energy efficiency taskforce being introduced next year.”

Moreover, Mr Walsh said the new measures could benefit farmers who have diversified into certain areas: “Extending business rate reliefs for retail and hospitality until 2024 and increasing it to 75% up to £110,000 per business could help those farmers who have diversified into farm shops or cafes.”

Meanwhile, NFU president Minette Batters welcomed several aspects of the Chancellor’s Autumn Statement:

“There is much to be welcomed from today’s announcement, particularly on investment in research and development and the roll out of gigabit broadband technology to those hardest to reach rural communities.”

She said these developments would boost efficiency and productivity on British farms while farmers continue to work towards net zero goals.

Ms Batters also highlighted the enormous pressure Britain’s farmers and growers are under due to rising energy, feed and fertiliser costs.

“We expect an announcement on future support for businesses before Christmas and it is vital this new targeted approach for business beyond next April includes UK food production and the food supply chain.

“With a safe, affordable domestic food supply being central to our nation’s success, we believe there are robust grounds for the government to classify our industry as a vulnerable sector when it comes to energy provision,” Ms Batters stressed.

“We also heard from the Chancellor today committing that government departments will have their overall budgets increased in real terms.

“We trust this will allow Defra to deliver a properly-funded Agricultural Transition Plan to ensure Britain’s farmers have the confidence to invest and grow their businesses, in turn, enabling British food, farming and the country to thrive,” she concluded.