There has been a mixed response to the March 2023 Budget as announced by Chancellor Jeremy Hunt.
On the one hand, clarity on property relief, pensions and machinery expenditure have been welcomed, but there is concern that energy support for business and rural levelling up have been overlooked.
NFU president Minette Batters; says: ‘Ahead of the Budget, the NFU was clear that greater support is needed for the thousands of farming and growing businesses which are trying, but struggling, to keep our nation fed amidst soaring production costs.
‘It is therefore extremely frustrating that the Energy and Trade Intensive Industries scheme was not extended to include hard-hit, energy intensive sectors such as horticulture and poultry.
‘It begs the question – where does boosting Britain’s food security fit into the Treasury’s growth plans?’
A more positive response was received from Jason Beedell, director of Rural Research at Strutt & Parker. He said the launch of a new consultation exploring the taxation of land used for the provision of ecosystem services was to be welcomed.
Quoted in the Farmers Guardian, he said: ‘This is long overdue and the potential expansion of Agricultural Property Relief (APR) for certain types of environmental land management would give farmers greater confidence that changes in land use will not put their tax status at risk.
‘We have long argued that landowners should not be penalised for taking steps to address the challenge of climate change and biodiversity loss. It would be a welcome step and, coupled with the guidance on the stacking and bundling of ecosystem payments which Defra has already promised, remove another barrier preventing farmers from getting more involved in environmental land management.’
On the government’s website there was a call for farmers and landowners to join a DEFRA consultation on the taxation of ecosystem service markets and the potential expansion of agricultural property relief from inheritance tax.
As announced at Budget 2023, the government is exploring elements of the tax treatment of ecosystem service markets and environmental land management.
First is a call for evidence on the tax treatment of the production and sale of ecosystem service units. The aim is to understand the commercial operations and the areas of uncertainty in respect of taxation.
This will be followed by a consultation about the scope of agricultural property relief from inheritance tax. The aim is to explore the extent to which the current scope of agricultural property relief may represent a barrier and, if necessary, potential updates to the scope of the existing land habitat provisions in the relief. The government is also using this opportunity to explore in more detail a recommendation in the recent Rock Review of tenant farming in England to restrict the application of 100 per cent agricultural property relief to longer tenancies of 8 or more years.
The relevant document can be accessed here.