The Government has set out its ongoing commitment to back British farmers through the Spring Budget. In 2024, the farming sector will benefit from the largest ever grant offer totalling £427 million, which will support investment in equipment, technology and infrastructure that will increase farm productivity and prosperity.
This includes the next and largest ever round of the Farming Equipment and Technology Fund which is now open for applicants until 17 April (more details can be found below).
The Improving Farm Productivity Fund round 2 is also open for applications until the 21 March, and supports farmers to invest in automation and solar energy installation.
The government is also providing £75 million to Internal Drainage Boards (IDBs) to upgrade their infrastructure and support them to recover from the damage caused by recent storms. This will enable more efficient water management on agricultural land and better protect farms and rural communities from flooding.
More details on how funding will be allocated to IDBs will be announced in due course.
Boost for farmers and environment with extension to Agricultural Property Relief
The Government has also announced an extension to the existing scope of Agricultural Property Relief.
This will now include all Environmental Land Management schemes (ELMs), covering the Sustainable Farming Incentive, Countryside Stewardship (and other stewardship schemes) and Landscape Recovery, as well as the England Woodland Creation Offer and other similar schemes from 6 April 2025. The extension also applies to the rest of the UK, benefiting all British farmers.
This means farmers and landowners taking part in such schemes will be eligible for Agricultural Property Relief and exempt from relevant inheritance tax. Land managed under an environmental agreement with, or on behalf of, the UK government, Devolved Administrations, public bodies, local authorities, or approved responsible bodies will all be in scope for Agricultural Property Relief.
It also removes a significant barrier to tenant farmers and landlords collaborating to enter schemes by removing the risk that tenants’ participation in schemes would change whether the land is eligible for APR.
The new policy design will include the following main features:
Extended relief will be available for lifetime transfers and transfers at death on or after 6 April 2025.
Relief will be available for land managed under an environmental agreement with, or on behalf of, the UK government, Devolved Administrations, public bodies, local authorities, or approved responsible bodies.
Relief will be available where there is an agreement in place for the environmental land management scheme on or after 6 March 2024. This includes an agreement entered into before 6 March 2024 if it remains in place on or after 6 March 2024.
Relief will continue to be available where an agreement has concluded if the land continues to be managed in a way that is consistent with that agreement.
Relief will only apply where the land was agricultural land for at least 2 years immediately prior to the land use change. There will not be a need to show the land was used for agricultural purposes and would have qualified for agricultural property relief before land use change. HMRC will provide guidance on the necessary evidence in due course.
The existing holding period for agricultural property relief will not be restarted by land use change. This means, for example, if an owner-occupier had occupied agricultural land and used it for agricultural purposes for 2 years or more then converting a parcel of the same land to environmental use will not require the land to be held for a further 2 years to qualify for relief.
The valuation of the qualifying land will be the market value of environmental land subject to the special assumption of a restriction to its existing use.
Consistent with the current rules, buildings used in connection with environmental land, including farmhouses, will qualify for relief where that building is occupied with, and that occupation is ancillary to, environmental land.
Implementing our commitments in the government response to the Rock Review by removing barriers and improving tenant farmers’ access to schemes. This change will help to incentivise more longer-term tenancy opportunities where landlords and tenants collaborate to share the benefits of our longer term environmental schemes.
Productivity and Slurry Applications now open
Funding is now available for farming equipment and technology for kit that will help you improve productivity and slurry management through the Farming Equipment and Technology Fund.
The window to apply will close at midday on 17 April 2024.
You can apply for one grant from each of the 3 themes of productivity, slurry management and animal health and welfare.
Farmers, foresters, growers and contractors to those sectors can apply.
The Rural Payments Agency (RPA) will allocate funding after all applications have been received and scored. If you are successful in your application, you could receive all or some of the funding that you apply for.
Successful applicants will receive a grant of:
a minimum of £1,000 and a maximum of £50,000 towards productivity items
a minimum of £1,000 and a maximum of £50,000 towards slurry items
a minimum of £1,000 and a maximum of £25,000 towards animal health and welfare items
We will pay a percentage of the cost depending on the item. This percentage is an increase on last year.
This funding will go towards either:
if an item costs you the same or more than the expected average cost in the item lists, we will pay the average cost.
if an item costs you less than the expected average cost in the item list, we will pay the actual item cost
For further information on the grants and items included please read the grant guidance on GOV.UK.
Our team will host a webinar covering the grants available on 12 March 2024. You will be able to put your questions to policy leads during the session. Register to attend the webinar.
Grants for animal health and welfare items will be available later this month. We'll let you know when you can apply.
Other Budget things to note
The Chancellor also announced an increase in the threshold in which businesses need to register VAT. This is mainly relevant to small turnover farms who sell directly to the public. These farms will be able to increase their turnover from £85,000 to £95,000 before they need to start charging VAT on their products.
Full expensing, which was made permanent at Autumn Statement 2023, allows companies to claim 100% capital allowances on qualifying plant and machinery investments (for example high tech manufacturing equipment) in the year the expenditure is incurred. However, first year capital allowances, including full expensing, have historically excluded assets that are bought for leasing or hiring to others. Recognising the business investment and growth opportunities, the government will seek to extend full expensing to assets for leasing when fiscal conditions allow and will publish draft legislation shortly.
From 1 June 2024, the government is abolishing Multiple Dwellings Relief, which affects the purchase of multiple properties in a single transaction in the Stamp Duty Land Tax regime. The government will engage with the agricultural industry to determine if there are any particular impacts for the sector that should be considered further.
The government is providing an additional £5 million for the Platinum Jubilee Village Halls Fund, to support local village halls across England to remain at the heart of their communities.
The government is investing £5 million over the next 3 years in an agri-food Launchpad in Mid and North Wales.
To further support alcohol producers, pubs, and the hospitality sector, and to help consumers with the cost of living, the government will freeze alcohol duty from 1 August 2024 until 1 February 2025.
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