Spring Budget 2024: an Agricultural perspective

Now the dust has settled on last week's Budget we take a look at a few highlights from the Chancellor's announcement from an Agricultural perspective.

Tax treatment of land held in environmental schemes

Tax treatment on land held in environmental schemes following the consultation launched last year has been confirmed with APR extended from April 2025 to include land managed under a qualifying environmental agreement, and APR will not be restricted to tenancies of at least 8 years. 

See our detailed comment on this matter here.

Government funding for Agribusiness in the form of grants

£427m of government funding announced for 2024 in the form of grants supporting investment in productivity and innovation will provide some with opportunities though what is not clear is the level of funding, whether split regionally, and how the support will work. It is expected to follow more recent grant funding rules like the ‘Farming Equipment and Technology Fund 2024’ which recently launched, with the RPA funding up to 60% of the cost of items to improve productivity, manage slurry or improve animal health and welfare. Check the qualifying criteria closely.

Both of the above add some confidence to the sector in being able to make decisions now and plan accordingly. Further, the grant funding will offer profit planning opportunities as items will be eligible for Capital Allowances in the year of purchase (brought into use).

Reduction in Capital Gains Tax levied on Residential Property sales

Jeremy Hunt also announced a reduction to the top rate of CGT levied on Residential Property sales, down from 28% to 24%. Perhaps with a hope that it might make landlords consider disposals and add some capacity to the housing market. The reduction takes effect from 6 April 2024 but don’t forget the annual exempt allowance for individuals falls on the same day from £6,000 to £3,000 – it’s worth crunching the numbers to understand if there is any benefit for delaying a disposal.

Abolishment of Furnished Holiday Lets (FHLs)

Further, and perhaps most interestingly, was the announced abolishment of Furnished Holiday Lets (FHLs) as this could have significant impact across various taxes. Currently, FHLs benefit from full relief of finance interest against profits and can also possibly benefit from IHT relief – though the latter is case specific and is generally determined by the number of additional services provided. The CGT position can also be attractive if one can satisfy the conditions and criteria to access the 10% tax rate under Business Asset Disposal Relief (BADR) rules. Further, there are benefits from Capital Allowances on furnishings, it will be interesting to see how HMRC approaches this aspect in particular. 

I suspect a consultation awaits on this one!