Planning investment in farm plant and machinery will be easier following the government’s recent mini-budget and financial statement.
The Annual Investment Allowance (AIA) for plant and machinery has now permanently set at £1m – after years of fluctuation when it has been as low as £25,000 and was due to revert from £1m to £200,000 next year.
That means all qualifying investments up to £1m can now be set against tax, rather than written off over years, says Jeremy Moody, secretary and adviser at the Central Association of Agricultural Valuers (CAAV).
Mr Moody welcomed the announcement by Chancellor Kwasi Kwarteng. “We have talked to the Treasury about the need for greater stability in the AIA, especially given the uncertainties of today’s supply chains,” he said.
“Farmers should be able to make a timely investment for good reasons, not just to get a tax relief, but the difficulty has been knowing when to invest and whether the that the allowance would be available.
“A farmer can now decide to invest in robotic milking machines, for example, and not be at risk should they not be delivered until next April.”
The government has also committed to a policy statement this autumn on agricultural productivity, viewing the sector as important, alongside digital connectivity and planning, says Mr Moody.
“I see this as essential after the last 30 years of falling behind competitor nations.
“We need, to ensure a profitable agriculture by implementing the changes worked on by the CAAV and the Agricultural Productivity Task Force. I hope we can help the farming economy to be much more productive.
“But this is not about absolute production but business efficiency and profitability, and so it’s also about business confidence and competence. We have been going sideways in agriculture for about three decades – pretty much since area payments were introduced.”
The loss of basic payments will prompt farmers to look harder at their businesses, he believes. “It would be good to have some positive stimuli to help people to do this.
“The government seems to be displaying serious interest in reforming planning regulation which is as much of an obstacle in the rural economy as the urban economy.”