‘The Chancellor fails to help many rural businesses,’ says CLA

19 March 2014

The CLA today (19 March) said the budget speech fails to benefit unincorporated rural businesses such as farms.

The organisation said Chancellor George Osborne remarked on the beneficial effects of a Corporation Tax rate reduction to 21 percent from April 2015, but this will not benefit all rural businesses.

CLA President Henry Robinson said: “A high proportion of rural businesses are unincorporated, and run by individual sole traders or family partnerships.

“This means their business profits are subject to income tax, the rates of which can be significantly higher than Corporation Tax. If these businesses could benefit from similar tax rate cuts, they too would be able to invest more and raise productivity, thereby helping the economic recovery.

“Instead, the tax burden on unincorporated businesses has increased since 2010 as a result of increases in the rate of income tax and withdrawal of capital allowances. These companies are less able to invest out of retained profits.”

The CLA said farmers and rural businesses contribute significantly to the economy and deserved more support from the Chancellor.

Mr Robinson said: “The Chancellor has missed a chance to support these businesses and enable them to continue to contribute to a sustainable and diversified rural economy and provide jobs for local communities.”

He added: “Farmers will be grateful for the increase in Annual Investment Allowance to invest in plant and machinery, but this doesn’t apply to farm buildings.”