As head of PKF Francis Clark’s Agricultural Sector group, Brian Harvey manages a dedicated team of agricultural accountants and tax advisers.
The 22 November will see the Chancellor give his first budget of the current parliament and from an agricultural perspective it will be interesting to see if the agreement with the Democratic Unionist Party (DUP) will see any concessions given to the farming sector.
I think this budget will see a few changes, however, with the majority of rural seats already a Conservative blue I suspect that the Chancellor’s attention might be aimed at appealing to the youth, whose vote eluded them in June and the public sector. As such you could well see the loosening of purse strings for public sector pay and changes to how student loans might work.
From an agricultural perspective, I have not heard too many wishes about what the sector wants from the Chancellor. Clearly the sector lacks clarity about what Brexit means in terms of post governmental agricultural support and how farming might be affected by future trade deals. Unfortunately Chancellor Hammond is unlikely to have any answers to this in his briefcase. So what in my opinion would be good news for the sector?
The Annual Investment Allowance is well understood and utilised by farmers to defer tax and keep the tax bills down. However, perhaps this has seen farmers invest in plant and machinery rather than investing in the fabric of the farm. I have never been one to encourage the incurring of capital expenditure simply to defer tax but the return of Agricultural Buildings Allowance, which was scrapped in April 2011, or something akin to it would be well received. This would undoubtedly encourage sustainable longer term investment in the sector rather than the purchase of depreciating kit, which would have to be a good thing.
Encouraging younger people into the farming industry is a pressing issue, if there is to be a thriving agricultural sector in the future. At present the rules with regards to Agricultural Property Relief (APR) serve to encourage elder statesmen farmers to retain ownership of the land.
Clearly I am not going to propose the removal of APR which would give rise to many beneficiaries of my clients being potentially liable for a much greater Inheritance Tax (IHT) bills, and you would not expect a turkey to vote for Christmas.
However, surely there must be a way in which a farmer can retire with dignity and relinquish their land without the prospect of their family being hammered by the taxman.
If a special provision could be permitted that would allow the value of the farmland at the date of retirement to be ‘protected from an IHT position’ I believe that this would see more land being passed on earlier and could ultimately improve the overall productivity of the sector and give more opportunities to new blood.
Perhaps this is wishful thinking and ultimately I suspect many land owners might prefer APR not to be tinkered with, as for the industry, this is, and remains, a very important relief that should not be taken for granted.