Spring Budget update for farming businesses
15th Apr 2024
The Spring Budget contained more surprises than initially anticipated and there were many announcements that will affect farming and rural businesses.
Extension to Agricultural Property Relief from 2025
The headline announcement for farmers is that, from 6 April 2025 land managed under an eligible land management scheme will qualify for Agricultural Property Relief (APR) for Inheritance Tax (IHT) purposes. The land will only qualify for APR providing that for 2 years immediately prior to being put into an eligible scheme it was used for agricultural purposes.
Abolition of Furnished Holiday Lets
In a blow to many rural businesses, the furnished holiday lets (FHL) tax regime will be abolished with effect from 6 April 2025, meaning:
- Capital Gains Tax (CGT) planning opportunities will be lost as there will be no longer be the ability to claim Rollover Relief or Business Asset Disposal Relief.
- Relief for mortgage interest will be restricted to a basic rate tax reducer.
- Capital allowances will no longer be available on the purchase of assets.
- FHL profits will no longer qualify as relevant earnings for pension contribution purposes.
Top rate of residential CGT reduced to 24%
Leading on from the abolition of FHLs, one of the big Budget announcements was the reduction in the top rate of residential CGT from 28% to 24% with effect from 6 April 2024. The lower rate of residential property CGT will remain at 18%.
National Insurance changes from 6 April 2024
In a welcome boost to the self-employed, the main rate of Class 4 NIC will be 6% with effect from 6 April 2024. This comprises of the 1% cut announced in the 2023 Autumn Statement and a further 2% cut announced in the 2024 Spring Budget. Furthermore, with effect from 6 April 2024 the requirement to pay Class 2 NIC will be abolished, although ability to make voluntary contributions will remain in specific circumstances.
The above is only a brief summary and, as ever, detailed advice should be sought from your accountant to tailor your specific needs before any decisions are made.
