Three mini budget benefits for farming
Planning investment in farm plant and machinery will be easier following the recent financial statement by the new Chancellor of the Exchequer, Kwasi Kwarteng.
After years of fluctuations when it has been as low as £25,000 and was due to revert from £1 million to £200,000 from April 2023, the Annual Investment Allowance (AIA) for plant and machinery has now been set permanently at £1 million. That means that all qualifying investments up to £1 million can be set against tax, rather than written off over years.
CAAV has talked to the Treasury about the need for greater stability in the AIA, especially given the uncertainties of today’s supply chains.
Farmers should be able to make a timely investment for good reasons, not just to get a tax relief, but the difficulty has been knowing when to invest and whether the that the allowance would be available. A farmer can now decide to invest in robotic milking machines, for example, and not be at risk should they not be delivered until next April.
The new Government has also committed to making a policy statement this autumn on agricultural productivity, picking this sector out as important, alongside digital connectivity and planning.
I see this as essential after the last 30 years of falling behind competitor nations. We need, to ensure a profitable agriculture by implementing the changes worked on by the CAAV and the Agricultural Productivity Task Force. I hope we can help the farming economy to be much more productive.
However, this is not about absolute production but business efficiency and profitability, and so it’s also about business confidence and competence. We have been going sideways in agriculture for about three decades – pretty much since area payments were introduced.
The loss of Basic Payments will prompt farmers to look harder at their businesses. It would be good to have some positive stimuli to help people to do this.
The Government seems to be displaying serious interest in reforming planning regulation which is as much of an obstacle in the rural economy as the urban economy. We are trying to make the case for permitted development rights for slurry stores, for example, which are needed to control environmental pollution.
It would help the economy to proceed rather than having to wait for overwhelmed planning departments to respond.
Jeremy Moody is secretary and adviser at the Central Association of Agricultural Valuers (CAAV)