March the Chancellor carried the famous red briefcase from 11 Downing Street to the Houses of Parliament and delivered the UK’s first budget since October 2018. The budget contains a number of notable items from an agricultural perspective.
The Chancellor has announced the launch of the Coronavirus Business Interruption Loan Scheme. The scheme provides up to £1 billion of lending to small and medium size businesses facing disruption caused by coronavirus. Under the scheme, loans of up to £1.2 million will be 80% guaranteed by the Government.
A 100% relief from business rates for small retail units has been introduced. Any retail units, (which could include farm shops and cafes), with a rateable value of less than £51,000 can have a business rate holiday for the 2020-2021 tax year.
Scrapping red diesel tax relief
The Chancellor announced that red diesel tax relief will be withdrawn in April 2022. Crucially, the relief will remain in place for agriculture. The Government will consult on whether other groups should be allowed to continue to use red diesel but has confirmed that horticulture, pisciculture and forestry will be protected as part of the agriculture exemption.
Although agriculture will not be directly affected, farmers may be indirectly affected. For example, upgrades to farm infrastructure may become more expensive as the construction industry adapts to the hike in fuel prices. The announcement is also a timely reminder to check your use of red diesel and ensure it complies for the statutory requirements, including that it is not used on public roads.
Entrepreneurs’ relief is a Capital Gains Tax relief that is available on the sale of all or a part of a business, subject to certain conditions. The relief allows taxpayers to pay a lower CGT rate of 10% on business disposals up to a certain value.
The Chancellor has significantly reduced the relief by cutting the value from £10 million to £1 million. Going forward, the normal CGT rate will apply to any cumulative gains over £1 million made by a taxpayer by selling all or part of a business across their lifetime. The change has effect for any disposal made on or after 11 March 2020.
The Chancellor has announced funding to improve flood resilience and provide relief to affected communities. Several hundred million pounds is being made available to the communities affected by flooding with the remainder earmarked to bolster flood defences.
A £640 million Nature for Climate Fund is being established. The Fund will invest with the aim of planting 30,000 hectares of trees and restoring 35,000 hectares of peatland. A Nature Recovery Fund will be established and given £25 million. The Fund will partner with landowners to restore habitats and species.
Infrastructure was one of the key pillars of this budget. The main focus of the increased funding will be aimed at large infrastructure (roads and railways) but the Chancellor also announced some welcome funding for rural communities. £510 million has been made available to improve rural mobile coverage and £5 billion will be invested in further rolling out gigabit broadband.
Full details of the March 2020 budget can be found here
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