The Country Land and Business Association (CLA) has called on the Government to simplify rural tax for diversified rural businesses after research revealed that the current system may be stifling growth.
The report, which comes ahead of the 2020 Budget, makes several recommendations designed to boost investment and growth within the agricultural sector, which includes the creation of a new business entity, the Rural Business Unit (RBU).
Under the proposed scheme, a diversified rural business would manage all its economic activities as one and be operated as a single taxable unit, “removing the fiscal impediments to the development of new rural business opportunities by empowering rural entrepreneurs to make their own decisions”.
The CLA, which represents around 30,000 rural businesses in England and Wales, says the creation of a new set of simplified rules would allow “greater freedom of investment” and lead to a surge in productivity and a larger contribution to the economy and the local community.
The latest statistics suggest that 66% of farm businesses in England in 2017/18 included some form of diversified activity, generating an additional £680 million in profit. Additionally, diversified activity accounted for around 28% of profits in 2017/18, while 22% of income was derived from a diversified enterprise.
Commenting on the proposals, CLA President Mark Bridgeman said: “The administration of our proposed system would be a simplification, saving time both for HM Revenue and Customs and for rural businesses. The change is considered necessary particularly in light of changes to agriculture post-Brexit.”
He added: “Many farmers are looking to diversify their business to protect themselves from uncertain trading conditions. Government should enable and encourage farmers to take action by making it as easy as possible to adapt their business model.”
To learn more about the proposals, click here.
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