Industry Calls For Development Tax Exemption On New Farm Buildings

The CLA, NFU, TFA and CAAV have sent a joint letter to Housing and Planning Minister Alok Sharma calling for new farm buildings to be exempted from a revised approach to development tax for local infrastructure.

Developers are already charged a Community Infrastructure Levy (CIL) when planning permission is granted to build residential and commercial units. Following a review of the system, recommendations have been made to the Government for a revised process called the Local Infrastructure Tariff (LIT). The new approach is causing concern among the rural organisations who say it is a tax on farm planning applications which do not generate the need for infrastructure. They say that because farmers pay for their own infrastructure this new farm tax should not be applied.

In the letter, the organisations say that in areas where a CIL is charged on new farm buildings, “the requirement to pay a substantial CIL charge has actually stopped farm development from taking place”. They argue that being included in the LIT will have a similar effect and cause financial strain for farm businesses. As a result they have called for a national exemption from development contributions.

The letter explains: “Most agricultural buildings are erected for the purposes of agriculture on the holding…a fundamentally different approach from most commercial buildings or housing developments which are built by investors for selling or letting. A new agricultural building will not result in an increase in capital value and so any CIL or LIT charges will have to be funded by farmers from loans, repaid from the increased revenue expected from the development over future years. The cost of servicing the loan will be an additional direct cost to the farming business and will be paid out of fluctuating farm incomes.”

CLA President Ross Murray said: “A tax aimed at housing and commercial development is simply inappropriate for new agricultural buildings. It restricts rural economic growth and prevents investment in new farm buildings which undermines competitive agriculture.

“Long-standing government guidance suggests that agricultural buildings are not buildings into which the general public normally go but this is being ignored by some local authorities when setting up their CIL charging schedules. It is vital for the Government to step in and decisively exempt them from CIL or the proposed Local Infrastructure Tariff.”

NFU Vice President Guy Smith said: “The NFU is concerned that regulatory systems, including the planning system, should encourage farmers to upgrade their farm buildings and operations, so they can run efficient farm businesses, meet regulatory requirements and improve environmental and animal welfare standards. Farm operations meet their own infrastructure needs and should not have to face unconnected development taxes.”

TFA Chief Executive George Dunn said: “In the context of Brexit when we need farm businesses to be investing to build efficiency, productivity and resilience the Government should not be seeking to discourage this through the imposition of ill thought through levies on new farm buildings.”

Jeremy Moody, secretary and adviser to the Central Association of Agricultural Valuers (CAAV), said: “We are concerned that the particular issues of large scale but low value farm buildings have not been properly considered in this review. The aim of the LIT is to capture a slice of the increase in value when you erect a building but there is virtually no increase in value with agricultural buildings.”

Click here to read the joint letter on the Community Infrastructure Levy and Local Infrastructure Tariff contributions from the CLA, NFU, TFA and CAAV in full.

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About The Author

John Swire - 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.