The Chancellors Autumn Statement seems to have excited the press, most particularly with the headline grabbing changes to Stamp Duty on residential property sales.
The measures announced deal with personal, business, property and investment taxation but whether any will have a significant effect on the man in the street or the farmer in his yard remains to be seen.
It is the announcements on investment in infrastructure in the days leading up to the Statement that will change all of our lives here in the West Country. Of course, we have heard many times of successive governments good intentions regarding the upgrading of the A303 but finally, given the fanfare surrounding proposals to tunnel under Stonehenge and to provide dual carriageway to within 12 miles of the Lizard, it may be about to happen.
How will all this affect the rural economy though?
Business rates relief is to be doubled and there is to be a full review of the structure of business rates. John Mortimer of the CLA said: “This marks a major breakthrough in a long running campaign by a range of business organisations to end perceived unfairness in the way business rates works. The Government had resisted this for a long time and so a concession to allow a ‘long term’ review is significant.”
As the headlines have told us, Stamp Duty Land Tax (SDLT) has had a major overhaul. It has been transformed from the old ‘Slab’ system where moving from one value bracket to the next created a vacuum in the market at the transition point.
The new system will be banded with zero tax up to £125,000; 2 per cent payable between there and £250,000; 5 per cent from £250k to £950,000; 10 per cent between £950k and £1.5m and 12 per cent over £1.5m.
This means that in any sale under £937,500 there will be less SDLT to pay than previously, however the charge will increase from previous levels as the value of the property increases from that level.
This would appear to be the Coalition Government’s alternative to a Mansion Tax, with a more structured and even system, albeit a tax that is only payable on purchase of a property and not annually.
The important thing to note here is that the changes apply only to residential property sales, and not to commercial property which will stay with the old system.
Sales of agricultural holdings will be treated as commercial sales and it will not be possible to split the farmhouse from the land holding to take advantage of the changes unless it is absolutely clear it is residential only.
It seems that capital allowances and the Annual Investment Allowance have been left to one side. The lack of information is unhelpful though, particularly for farmers who frequently have to make very large payments for costly specialist equipment.
The timing of any such purchases will need to be carefully assessed as we will have to assume the temporary increases will cease. It is therefore advisable to take expert advice should you foresee the need for any significant purchases in the near future.
Mark Seager at Old Mill Accountants said: “As things stand at the moment the Annual Investment Allowance is set to be reduced from £500,000 per annum to £25,000 per annum on the 31 December 2015. As many farmers and agribusinesses exceed this spend, planning for timing of expenditure during the 2015/16 tax year will be absolutely essential.”