A body that may be little known by the wider general public but which plays an important role for many of us in Carter Jonas is the Central Association of Agricultural Valuers (CAAV).
The CAAV provides professional support and guidance on a wide range of legislative matters that impact on the rural sector and it has recently published a thought provoking discussion document on how our tax legislation could be overhauled to promote greater productivity in the farming sector post Brexit.
According to the CAAV, some simple changes could make a big difference. The paper considers ways to assist entry, progression and exit from farming; innovation and investment; resilience; and the management of risk.
“One of the key factors that needs addressing is access to land,” explains Jeremy Moody, secretary and adviser to the CAAV. This involves freeing up more land for rent, as well as ensuring that land farmed in-hand is passed down to the next generation who will farm it best.
Learning from experience in Ireland, Mr Moody suggests that encouraging farmers to let land by providing income tax relief on the rental income which would be geared to the length of term of the lease would be something the government should seriously consider. It is important to encourage longer leases because farming is a long term business and tenants need confidence that they will have sufficient time to benefit from any investment they make in the fertility of the land or fixed equipment.
Further, Mr Moody points out that in recent years Government tax policies have favoured companies under the Corporation Tax regime which has left many farming businesses which trade as partnerships and sole traders at a serious disadvantage. Mr Moody argues that, “Businesses should be treated equally for what they do, not discriminated against for the way they are structured”.
Mr Moody also argues that greater investment and innovation will be key to future productivity and resilience, and the CAAV is arguing for the reinstatement of Agricultural Buildings Allowances to encourage such investment which was abolished on the basis that a cut in Corporation Tax would compensate businesses. Further, to help farmers embrace new technologies there should also be a significant capital allowance for automation and digital technologies spread over five years.
Mr Moody also recognises that a key role farmers will have to play is in the management of the environment and he considers alterations to the tax system could be considered to boost soil health, water storage, and provision of other ecosystem services.
While the above ideas are aimed at helping boost agricultural productivity and environmental sustainability Moody also recognises the importance of the wider rural economy, and the value of diversification. However diversifying can be a risky move, so it is important that support is available via tax reliefs for abortive proposals, and the ability to write off losses against the other parts of the farming business.
This is only a very brief summary of the CAAV report but it is a thought provoking document that may well peak some interest in the Treasury.
Steven Mclaughlin – Head of Rural Property Valuation
Member of the CAAV Property Committee