The Spring Statement was seen by many as an opportunity for Chancellor Rishi Sunak to help with the spiralling costs of farm inputs, as well as supporting the less affluent members of the rural community to cope with the cost-of-living crisis.
Sadly, such optimism soon turned to dismay when Mr Sunak took to the commons floor to deliver his proposals.
Yes, there were some minor concessions that were broadly welcomed, providing a modicum of relief for those most impacted by the tumultuous times in which we live.
But the headline-grabbing policies, the tax breaks a Tory government might be expected to pull out the bag when we’re all suffering, were conspicuous only by their absence.
So, what exactly did the Chancellor deliver on March 23rd this year?
The main points include:
- A five pence reduction in fuel duty from 57.95p to 52.95p.
- Raising the National Insurance threshold from £9,880 to £12,570.
- Cutting the basic rate of income tax from 20 per cent to 19 per cent from 2024.
So, exactly how helpful are these?
Fuel duty
The five pence reduction in fuel duty was broadly welcomed by everyone who runs a vehicle.
But Ian Parker, Director on our agricultural team here at Whitley Stimpson, says it’s unlikely to make any material difference to farmers whatsoever.
Ian said:
“Farm inputs costs are soaring to unprecedented levels. The price of fertiliser has reached eye watering highs over recent months due to the war in Ukraine and the disruption in manufacturing and supply that has caused. Energy prices are also sky high. Plus, the cut is the equivalent to just a one pence reduction in duty on red diesel. So, whereas this is certainly a welcome step, it is somewhat cold comfort for farmers who are wrestling with sky high costs at one end and squeezed margins at the other as supermarkets try to beat down prices.”
National Insurance
Although the rise in the threshold for national insurance is likely to have very little impact on farmers, it is good news for farm workers and less affluent members of the rural community.
The change means thousands of lower paid workers will be taken out of national insurance contributions, or will see their contributions reduced, while still enjoying all the benefits.
However, many have criticised the Chancellor for not putting off the hike in national insurance of 1.25 per cent that took effect in April. This adds extra cost to farm businesses at a time when other costs are huge.
Ian Parker said:
“The hike in national insurance will impact on both farm workers and farm business, so whilst the cut in the threshold for national insurance is welcome, it feels a bit like giving with one hand, and taking with the other. He also highlighted that whilst the rate of National Insurance has increased by 1.25% this is actually an increase of 10.4% which the Government are far less keen to publicise!”
Ian added that the overall reduction in income tax was good news for everyone, but taken as a whole, the Spring Statement had been a bit of a damp squib for rural communities.
“There is so much more we feel Mr Sunak could have done to help the countryside,” he said. “It feels like a missed opportunity.”
For advice on the changes announced in the Spring Statement, or tax or financial issues generally, get in touch with Ian Parker on 01295 270200 or email ianp@whitleystimpson.co.uk.
Other Agricultural Spotlight Summer 2022 articles
Government announces plan to help farmers with rising input costs