New allowance is an exciting change for farmers

The allowance will make a significant difference to farm investment by allowing landowners to offset two per cent of the building cost against income tax or corporation tax each year, for the next 50 years.

Although the tax saving in itself is not a huge incentive, we believe that, combined with improved building efficiencies, it may be enough to tip the balance when farmers are looking to update their infrastructure.

Alongside the increase in the annual investment allowance, to £1 million a year, this is the biggest thing to come out of the Budget. Since the Government abolished the agricultural buildings allowance in 2011 there has been no tax relief available on new farm buildings, so this is an exciting change.

The SBA applies to the erection or refurbishment of commercial buildings from October 29 last year. Where contracts have been signed or work commenced before then, the SBA will not be available, although it may be possible to claim partial eligibility, if one contract has been signed covering the structure, but another is yet to be agreed for the concrete, for example.

The allowance covers commercial offices, storage and livestock buildings – whether for the landowner’s own use or rental – and also applies to structures including walls, bridges and tunnels. In addition, the SBA covers the cost of necessary demolition and land alterations, although not the cost of the land or obtaining planning permissions. Residential dwellings are also excluded.

As ever there is plenty of small print with this new allowance. Our team of experts are on hand to guide you through the whole process from the initial idea, to the application for the allowance, to the planning stage.

If you need our assistance please visit us or telephone one of our offices.

Richard Corbett, Partner in the Oswestry office, Roger Parry & Partners