Lack of action on fuel duty deals blow to rural communities

There was a mixed reaction from the agricultural ‑community to the Budget yesterday, with the lack of action on fuel duty being the biggest disappointment from the point of view of the National Farming Union of Scotland.

Union chief executive Scott Walker described this omission as “a blow to all those living and working in rural areas for whom a car is a necessity, not a luxury”.

The usual rise in fuel duty of 3p a litre, due to be implemented later this year, was also picked up by Peter Kendall, president of the NFU south of the Border.

He pointed out that those working in rural areas were already suffering from higher fuel prices as recent increases had been quite dramatic.

Sean McCann, of NFU Mutual Insurance, weighed in with the comment that country people would be hit very hard with increased fuel prices this autumn.

Describing the whole Budget package, Kendall said it was a lost opportunity. He had wanted the Treasury to introduce measures that would have allowed farming to capitalise on the growing confidence in the industry to the wider benefit of the economy, but his had not happened.

Walker had a similar view saying the UK government seemed to be so committed to paring back the budget deficit that it was not adopting schemes that were being suggested to try to invigorate the rural economy.

He specifically mentioned the Scottish union’s proposals to create a tax incentive to let land to new agricultural businesses and reinstating the annual investment allowance.

Jamie Younger, chair of taxation group at Scottish Land and Estates –which has 2,500 members and represents the majority of landowners in Scotland – saw the Budget as giving with one hand and taking away with the other. “Reductions in the rates of corporation tax and the top rate of income tax will benefit some rural businesses, but the cuts in capital allowances previously announced will not be conducive to investment.”

He warned that the ability of many of Scotland’s estates to deliver a huge range of environmental and social benefits depended heavily upon the owners’ total income from the estate business or outside.

“The proposed capping of tax reliefs in 2013-14, for example from farm or other losses, to £50,000 or 25 per cent of total income, will in some cases significantly reduce the funds available to invest,” he said.

The SLE is also concerned that the proposed abolition of zero rating relief on VAT for alterations to listed buildings was a step in the wrong direction. “We had pressed hard for a reduction in the VAT rate applied to repairs and this has not been forthcoming.”

However, it was pleased that HM Revenue and Customs had confirmed that renewables schemes receiving feed in tariff or renewable heat incentive – apart from solar – were eligible for an 18 per cent capital allowance as there had been threats these would be limited to 8 per cent, regardless of the useful life of the technology. “This will allow investment in renewables projects to go ahead on a firmer footing,” said the SLE.