The Budget was a tale of two halves for Cumbrian farmers trading as companies, a leading Cumbrian accountancy firm said.
Armstrong Watson said Chancellor Rishi Sunak’s Budget on the one hand increased the headline rates of Corporation Tax, but on other announced a Super Deduction for companies.
Mr Sunak announced Corporation Tax will rise to 25 per cent in 2023, up from 19 per cent for businesses with profits over £250,000 for businesses operating within a limited company. He is also creating a Small Profits Rate to ensure only businesses with profits over £250,000 will be taxed at the 25 per cent rate – 10 per cent of all companies will pay the full higher rate – while those with profits of £50,000 or less will continue to pay 19 per cent.
There will be a tapered rate for companies with profits between £50,000 and £250,000.
Armstrong Watson partner and head of agriculture Andrew Robinson, said: “The increase in Corporation Tax did not come as a surprise as it had been widely leaked.
“The new 25 per cent main rate only applies to profits in excess of £250,000 so many farming companies will continue to pay lower rates than unincorporated businesses.
“The much-anticipated increases in Capital Gains Tax did not materialise, and it is likely that a further announcement or consultation document will be released later in the month.
“The predictions of revenues from both Capital Gains Tax and Inheritance Tax over the next five years show modest increases. This does not suggest major changes which will impact on agriculture.”
Meanwhile the new Super Deduction will see companies who invest in qualifying plant and machinery, from April 1 to March 2023, benefit from a 130 per cent capital tax allowance, meaning their tax bill is cut by up to 25p for every £1 they invest.
Andrew added: “The new proposed Super Deduction is again discriminatory against any businesses operating as partnerships or sole traders.
“It is just the same as the Research and Development tax credit situation which is only available to companies.
“There are many partnerships and family businesses that are investing in these projects and structures that should also get the tax benefits.”
