Spring Statement 2022: What’s the impact on the rural economy?
In common with many chancellor statements, much of the big news from the 2022 Spring Statement had been leaked or anticipated beforehand, so the announcements of cuts in fuel duty did not come as much of a surprise.
What help has been outlined for rural businesses?
There certainly were some aspects to the statement which will help the rural economy, including the freezing of the business rates multiplier and a 50% relief for eligible retail, hospitality, and leisure businesses.
However, a more intriguing announcement related to tax relief for capital expenditure which is somewhat lower than elsewhere in the OECD.
To rectify this, a number of enhancements to capital allowances will be considered:
- Increasing the permanent level of the Annual Investment Allowance, for example to £500,000
- Increasing Writing Down Allowances for main and special rate assets from their current levels of 18% and 6% to 20% and 8%
- Introducing a higher First Year Allowance with the remaining expenditure written down by standard Writing Down Allowances
- Introduce a new form of “super allowance” to give first year relief at over 100% (and perhaps make it available to individuals and partnerships, not just limited companies)
- Introduce “full expensing”, to allow businesses to write off the costs of qualifying investment in the year of acquisition
- consider changes to other allowances, such as the Structures and Buildings Allowance, or new reliefs targeted at specific investments
Any new allowances will not be as generous as the current 130% super-deduction, but it is encouraging to see that the chancellor recognises the need for a replacement allowance when super deductions end in March 2023.
Commenting on the report MHA agricultural manager, Yvonne Coulston [internal link to Yvonne’s team page] remarked – “The prospect of bringing UK capital allowances into line with those of our competitors is an attractive one. I just hope that the chancellor makes the new reliefs available to partnerships as well as companies, given that most family farms are run as partnerships.”
This article is part of our Spring Statement 2022 hub. For more analysis and insight, please click here.