Whilst the Chancellor’s measures are all welcome, they are just a drop in the ocean compared to the massive increase in input costs faced by farmers in recent months. Below are a few highlights from Rishi Sunak’s announcement:
The Chancellor announced a 5 pence per litre reduction in fuel duty effective from 6pm on 23rd March. This is welcome but does nothing to alleviate the massive increases in the cost of red diesel in recent months. The duty on red diesel is only reducing by approximately 1 penny per litre.
The Chancellor was under pressure to cancel the National Insurance increases of 1.25% effective from 6 April 2022. He resisted this pressure but announced an increase in National Insurance thresholds from July 2022. This is the level of income an employee or self-employed person starts to pay National Insurance, and will be increased to £12,570 per annum, the same as the personal allowance for Income Tax. This produces an annual saving of about £330.
The Chancellor published a “Tax Plan” which sets out the changes he intends to introduce before the end of this parliament in 2024. Included in this is a pledge to reduce the basic rate of Income Tax by 1% to 19%.
The employment allowance is a relief which allows business operating a PAYE scheme to reduce the amount they pay to HMRC. Businesses with an employer’s national insurance liability of less than £100,000 per year, can currently deduct £3,000 from the amount they pay over to HMRC. This was due to increase to £4,000 in April 2022, but is being increased to £5,000.
Included in the Tax Plan are measures to consult on changes to the Research and Development Tax Credit, and Capital Allowances on equipment purchases. Further details of these should be published later in the year.
If you’d like to discuss tax planning for your Agricultural business, please get in touch with a our Farming and Agriculture team on 0808 144 5575 or help@armstrongwatson.co.uk
