The countryside did not shriek from the Autumn Statement headlines, but if you look hard enough there are some useful points.
The temporary rise in the Annual Investment Allowance is excellent news. This had been much reduced for the current tax year, down from £100,000 to a mere £25,000. This is the amount which a business can write off straightaway against its income for the purchase of new plant and machinery. It’s going back up again from 1 January 2013, to £250,000 for two years - its highest value yet. And once again a meaningful amount for the purchase of new tractors, harvesters and the like on farms. There has however been no change in the rate of annual writing down allowances on plant and machinery pools after the first year, still down at a meagre 18%
The cancellation of January’s fuel duty rise will also be good news, meaning we won’t see another hike in road fuel prices of 3.02p/litre. April’s rise has also been postponed until September. Government has also committed itself to look at an extension of the Rural Fuel Rebate which now applies in the remote Scottish islands, to consider whether it should apply in other remote rural areas.
For rural traders who work through limited companies, the main rate of Corporation Tax drops to 21% for the 2014 financial year (it was to have been 22%), and the small profits rate (likely to be more applicable to most rural incorporated businesses) stays at the anticipated 20%.
Smaller rural businesses should also take a look at the new ‘cash accounting’ proposals. Basically businesses with receipts of up to £77,000 will be able to opt for cash accounting for their Income Tax liability from April 2013 – so no need to account for debtors, creditors, prepayments, accruals, opening and closing valuations. Once ‘in’ it will be possible to stick with cash accounting up to annual receipts of up to £154,000. This could be a tremendous simplification for the smaller rural sole trader, although perhaps less welcome news to accountants. There are also proposals to allow some expenses to be covered by standard deductions rather than actual expenditure. Whether this is good or bad will depend on the allowable deductions – details are awaited, but if the flat rate allowances are generous enough this could also be a welcome saving of administrative effort for the smaller, or start-up, enterprise. If the existing VAT flat-rate schemes are anything to go by it won’t be too generous as an alternative.
Local Enterprise Partnerships (LEPs) are set to rule the business world. They are all going to receive £250,000 to develop their leadership capacity (some are lacking in this apparently); they are expected to take a role with further education colleges in identifying local skills requirements; they will have a say in directing European development funding at the local level and numerous other activities identified in the full Economic Statement Report (p73). So get to know your local LEP.
There will be more spending on infrastructure with an update of the National Infrastructure Plan. This map from p37 of the full statement summarises the plans:
This allocation also includes £980 million to build 100 schools and £270 million to modernise further education colleges – local agricultural education may benefit from some of the latter. There’s also an additional £120 million for flood defences – but will this be anywhere near enough, and does it reflect the potential role for ‘green infrastructure’ and other ‘ecosystem service’ solutions to flooding? There’s more on capital spending on p63 of the full report (link below).
Other key points:
- The Inheritance Tax Nil Rate Band goes up to £329,000 in April 2015 from its current £325,000 where it has languished now for a few years (effectively exempting £658,000 for married couples from IHT from that date);
- Empty Property Relief from Rates will be available for newly-built commercial property, completed between 1 October 2013 and 30 September 2016 for up to 18 months from completion;
- There is a temporary doubling of the rate of small business rate relief for 12 months from April 2013;
- Static caravans will be subject to 5% VAT from 6 April 2013
- Employee share ownership schemes will be able to give employees £2,000 worth of shares, effectively tax free, and employees will be exempt from CGT on the first £50,000 of disposal proceeds from the sale of such shares
- New regulations will be subject to a “1 for 2″ rule: the cost of the new regulation will have to be offset by twice as much in savings from the abolition of old regulations (watch for some clever government accounting here);
- Annual exemption from CGT goes up to £11,000 in 2014/15 and £11,100 the year after that;
- TUPE Regulations (Transfer of Undertakings, Protection of Employment) are to be reviewed with a view to simplification/reduction of impact on employers (presumably with a bigger impact therefore on employees);
- Our government has agreed with USA to share more tax information on individuals than ever before – government hopes this will be the first of many such international agreements (so the hunt for a good tax haven becomes ever more difficult);
Rates and allowances for most of the day to day taxes and benefits can be found on this table (linked here)
The full Autumn Statement itself can be seen here.
Other useful links:
HM Treasury Autumn Statement 2012 page (includes numerous further links to twitter, youtube etc)