Farming News - Farming families reminded to watch out for Capital Gains Tax changes in the Budget
Farming families reminded to watch out for Capital Gains Tax changes in the Budget
Financial advisers at NFU Mutual are reminding farming families to watch out for changes to Capital Gains Tax in the Budget (Wednesday 27th October)
Capital Gains Tax can be charged when as asset such as land or buildings are sold or given away, based on the increase in value during the period of ownership.
Gains are currently wiped away on death, but that could change in the Budget for some farming families if recommendations from the Office of Tax Simplification are enacted.
Sean McCann, Chartered Financial Planner at NFU Mutual, said: “Many farmers choose to hold on to their farming assets until death, on the basis that not only might they be free of inheritance tax thanks to Agricultural or Business Property Relief, but also escape Capital Gains Tax if sold shortly after death.
“However, the Office of Tax Simplification has recommended that gains should no longer be wiped on death where Agricultural or Business Property relief has been claimed to reduce inheritance tax, meaning bigger tax bills for some farming families.
“The biggest impact will be on those who sell land and buildings they’ve recently inherited. The good news is that those families that retain the assets and continue to farm won’t face any immediate tax liability under these proposals.”
There is also a possibility that Capital Gains Tax rates could be increasing, affecting farming families who are considering leaving the industry.
Headline rates of Capital Gains Tax are currently 10% and 20% but could be aligned with Income Tax rates at 20%, 40% and 45%.
The likelihood of tax changes was widely anticipated in an NFU Mutual survey of nearly 2,500 people ahead of the Chancellor’s Budget. A fifth of respondents (20%) expected changes to Capital Gains Tax.
Farmers will also be hoping for some welcome detail in the Budget on incoming agri-tech grants.
Chris Walsh, Farm Specialist at NFU Mutual said: “The Chancellor could provide some detail in the Budget on the new Farming Investment Fund.
“As part of the transition away from EU agricultural policy following Brexit, this fund is due to launch in Autumn. It will offer grants to farmers to pay towards the cost of equipment, technology and infrastructure.
“There are due to be two funds split into smaller and larger grants, and they are expected to be for robotic and automated technology, water storage infrastructure, and sorting and processing products.”
NFU Mutual’s personal finance specialists will be analysing the Chancellor’s Budget in detail and providing detailed comment on the implications for farm businesses, individuals and families on its website: www.nfumutual.co.uk