Farm businesses run as sole traders and family partnerships have missed out on a major tax break because the concession is restricted to limited companies.
The exclusion of a huge proportion of the rural economy from the new super deduction capital allowance is perverse and discriminatory, says the Central Association of Agricultural Valuers (CAAV).
The 130% super deduction capital allowance announced in last month’s Spring Budget is limited to companies – excluding a substantial part of the economy, says CAAV secretary and adviser Jeremy Moody.
“At a time when the economy needs more support to invest than ever before, the exclusion of partnerships and sole traders from the super deduction relief is limiting productivity in the rural and agricultural sectors.”
Agricultural productivity has increased by only 0.7% a year since 2000, says Mr Moody. The situation needs remedying – and taking action is easier now the UK has more control outside the EU, he adds.
“Instead, this exclusion is perceived as a direct and conscious discrimination against all unincorporated businesses by the government – hindering investment and productivity.”
Mr Moody says discrimination against the rural sector is further highlighted by the Help to Grow Digital scheme – also announced in the Budget – which requires a company registration number for a business to express an interest.
Rural and agricultural businesses are often family-run and very few are incorporated. Mr Moody says the need for investment by partnerships and sole traders is just as valid as investment by companies.
The government argues that it is common for capital allowances to be limited to companies. But Mr Moody says this isn’t always the case – including recently abolished enhanced capital allowances energy and water investments.
“The fact that the super deduction will be available for two full years gives greater security for companies planning expenditure. But this still leaves unincorporated businesses without investment confidence.”