Budget is a welcome invitation to invest, says CAAV

The Autumn Budget’s changes to capital allowances gives farmers and landowners a good opportunity to invest in their businesses, says the Central Association of Agricultural Valuers.

Announcing the Budget on Monday (29 October) Chancellor, Philip Hammond, offered some new powerful supportive tools for farmers to prepare for the future, says Jeremy Moody, secretary and adviser to the CAAV. “With the planned removal of BPS, we have a time window to manage change and build businesses fit for the challenges.  These changes will help farmers prepare for the post-Brexit world.”

The introduction of a new capital allowance for non-residential buildings is especially useful for agricultural businesses which typically depend on buildings, many of which are now aged, says Mr Moody. “This gives new assistance for the capital investments many will need.”

The new structures and buildings allowance means that any new projects that have not had contracts entered into before 29 October 2018, will be eligible for a 2% per annum capital allowance. It covers the construction of any building intended for commercial use or any works – including demolition – to improve or convert existing structures.

“There used to be an Agricultural Buildings Allowance, but this was removed some years ago. While Corporation Tax was cut in compensation, that did not help farmers who pay Income Tax,” explains Mr Moody. “This new buildings allowance is extremely welcome as agriculture relies heavily on renewing fixed structures – something that will be especially important as we traverse Brexit.”

However, Mr Moody also points to the much more generous rates of allowance in the Republic of Ireland, where building costs can be written off within seven years.

The Budget also introduced a major increase in the Annual Investment Allowance, from £200,000 a year to £1m for each of the next two years, starting on 1 January 2019.  This means that much more capital spending on plant and machinery can be fully set off against tax in the first year.

“The increase in the AIA is very welcome as this gives farmers support in investing in plant and machinery, perhaps particularly in new technology and innovations,” explains Mr Moody.

“We have a time window in the transitional period of Brexit for farms to manage change, getting ahead of it rather than risking being managed by it,” he says. “These allowances are a very helpful support and provide farmers with the confidence to make the necessary business investments to be ready for the future.”

 

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About The Author

John Swire - Deputy editor of Agronomist and Arable Farmer as well as responsibility for the Agronomist and Arable Farmer and Farm Business websites. After 17 years milking cows on the family farm John started writing about agriculture in 1998 and has since written for a variety of publications and has developed a wide circle of contacts within the industry. When not working John is a season ticket holder at Stoke City and also of late has become a fitness freak, listing cycling, swimming and walking as his exercises of choice.