On the back of the announcement that the farming support budget remains at £2.4 billion, Defra has confirmed that SFI 2024 is open for business. That is good news for those who have applications pending and who were concerned that they may have been put on a go slow until the spending review and the budget had been concluded. The CLA has pointed out that the £2.4 billion budget has remained unchanged since 2014 and is therefore a cut in real terms.
Defra’s announcement also confirms the 2025 deduction to delinked payments will be 76% for the first £30,000 and 100% for everything over that level. The maximum 2025 delinked payment will therefore be £7,200.
Over the next few days there will, no doubt, be acres of print and commentary on the impact of the budget on different sectors, including agriculture. The big headlines will be capping the agricultural property and business property reliefs from inheritance tax (IHT) with effect from April 2026 and the immediate increase in capital gains tax (CGT) from 10% to 18% for basic rate tax-payers and from 20% to 24% for higher rate tax-payers. However, the CGT rate for the sale/disposal of qualifying business assets remains at 10% until April 2025 which will provide a window for owner occupiers wishing to sell all or part of their farm before that date.
The prospect of a significant IHT liability may well encourage life-time disposals of parts of farms to reduce the value of the part that remains owned at death to below the new £1m threshold above which IHT will apply. It could also incentivise the transfer of farms into property owning companies – where incorporation relief may apply – on the basis that companies never die and may provide more flexibility for lifetime succession planning rather than dealing with succession and asset transfer after a death has occurred.
The accountants, tax advisers and valuers will undoubtedly be busy which may, at least, provide an element of growth in the professional services sector.
