What the budget means for the rural property market.

Now that all of the shouting, finger-pointing, fat-shaming and bad jokes have died down, we can take a closer look at what really happened in yesterday’s budget and what it might mean for the rural property market in particular. While most of the measures were widely trailed and fairly predictable in nature, there were one or two interesting nuggets which suggested that the government does occasionally pay attention to what is going on outside London.

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There were of course the headline figures which have been analysed to death such as the changes to NI and child benefit and the continuing freezes to general taxation rates and fuel duty and we don’t propose to add out tuppence there, but the measures below caught the eye from rural perspective. ?

The Non-Domicile Regime Ends

The reform will significantly reduce the ability of non-domiciled persons to take advantage of beneficial tax arrangements and after four years, they will have to pay the same tax as other UK residents. This will have a significant effect on the desirability of the UK as a place to live for the super-wealthy and is likely to have a cooling effect on the super-prime market in the short term as the practicalities are worked out.?

Capital Gains Tax Reduction

A useful benefit for those who own multiple properties, and despite being a notable tax cut, estimates suggest that it may in fact increase the tax take from CGT. It’s thought that quite a number of multiple property owners might be tempted to sell up under a lighter tax burden, but this will probably be of interest to recent BTL investors rather than rural farms and estates where properties are often held long-term. ?

Stamp Duty Multiple Dwellings Relief Ends

This relief only applied in England and Northern Ireland but was a valuable one for the BTL market. It will raise issues for those buying farms and estates where such purchases often include more than one dwelling. We understand there will be further consultation to be held with agricultural sector to try and establish some sort of qualifying agricultural exemption.

VAT threshold increased

The threshold at which businesses need to register for VAT was increased from ￡85,000 per annum to ￡90,000 per annum. Whilst this is welcome news for small rural businesses, it’s a pretty small increase, could the government have done better?

Agricultural Property Relief for Agri-Environment Schemes

This is a big one as far as the rural market is concerned but has received very little mainstream coverage. The question of how HMRC would treat previously farmed land with low or zero agricultural output being used for environmental purposes was seen as a major obstacle to the take up of environmental schemes. For many traditional farms and estates there has been a marked reluctance to dip more than a toe into these schemes due to the possibility of a challenge to APR by the tax man in years to come. In addition to this, tenant farmers seeking the opportunity to diversify have faced refusal from Landlords again fearing the potential risks to IHT planning. ?

#ruralproperty #ruralpropertymarket #budget2024

Edward Dixon

MRICS FAAV RICS Registered Valuer