Autumn Statement 2014 series: Give farmers certainty over investment decisions
As someone who advises farmers on the tax implications of their investments in new plant and machinery, you may not be surprised to learn that getting some certainty over the annual investment allowance is top of my autumn statement wish-list.
If you consider that a new tractor, combine or harvester for example, can cost anywhere between £50,000 and £200,000 and the annual investment allowance (the rate at which investments in qualifying plant and machinery can be written off against taxable profits) is due to dip to £25,000 from January 1 2016, then you are going to need to time that investment very carefully.
It would be very useful therefore if the chancellor could give some indication of what he’s going to do with the AIA, which currently stands at £500,000, post December 2015.
Like any business, farmers have to plan their capital expenditure well in advance, but I fear many will be forced to bring forward investments unnecessarily if there is no firm commitment to extend the current AIA rate, or at the very least reduce it to a rate that would still be palatable such as the £250,000 it used to be.
I would also like the chancellor to scrap Class 4 NICs which are another bugbear for farming businesses that operate as a partnership. This is an additional 9% charge on profits between £7956 and £41,865 and 2% thereafter.
Even a reduction in the rate of Class 4 NICs would make for a more level playing field with limited companies.
Liz Cliffe is head of the farming and rural business team at Moore and Smalley in Preston.