Rural businesses snubbed in UK budget says valuer

The UK’s rural economy received a major snub in the recent budget, an industry expert has claimed.

Jeremy Moody

Legislative specialist, Jeremy Moody of the Central Association ofAgricultural Valuers has claimed that the exclusion of a huge proportion of therural economy from the new super deduction capital allowance is“perverse and discriminatory”.The 130% super deduction capital allowance announced in the SpringBudget is limited to companies, excluding a substantial part of theeconomy, said Moody:“At a time when the economy needs more support to invest than everbefore, the exclusion of partnerships and sole traders from the superdeduction relief is limiting productivity in the rural and agriculturalsectors in which these business structures dominate.UK agricultural total factor productivity (efficiency of turning £ ofinputs into £ of outputs) had, according to Moody, only increased at arate of 0.9% a year since 1964 - and by a still lower 0.7% a year since2000:“This needs serious remedying,” said Moody. “Now we are outside of theEU and CAP and have more control over our own policy, taking actionshould be easier. But instead, this exclusion is perceived as a directand conscious discrimination against all unincorporated businesses bythe Government – hindering investment and productivity.”He said the snub had been exacerbated by the Help to Grow Digital scheme- also announced in the Budget - which requires a company registrationnumber for a business to express an interest.Moody said that rural and agricultural businesses tended to befamily-run and very few were incorporated.“The Chancellor said: ‘We need to do even more to encourage businessesto invest right now,’ but the exclusion of a significant proportion ofrural businesses seems both perverse and discriminatory – and incontrast to his statement.“Investment by partnerships and sole traders is just as wanted and justas valid.”He conceded that companies faced a rise in corporation tax from April2023 - but stated that the tax expected from income tax and otherpersonal taxes would also rise as thresholds had been frozen.“The government has highlighted that all businesses are eligible toclaim the highest ever annual investment allowance (AIA) of £1m untilthe end of 2021 – however, less than two months’ notice was given thatit was now falling dramatically to £200,000,” said Moody.“The problem is that businesses are not being provided with thenecessary time to plan their investments with confidence,” says MrMoody. “AIA has an unstable history of being altered at short notice,swinging between £25,000 and £1m.*It has also been claimed that Scotland’s rural economy has benshort-changed.Speaking ahead of the inter-ministerial group with the UK government andthe devolved administrations, rural economy secretary, Fergus Ewingsaid the UK government had allocated £14 million for one single year, asopposed to our clear evidence for a £62 million multi-year allocation,which would have been available if the UK had remained in the EU.He also said the rural funding budget had fallen by £170 million.