Budget 2018: New buildings allowance could offer tax savings
A new allowance unveiled at this year’s budget could offer poultry farmers tax savings if constructing or refurbishing sheds.
Chancellor Philip Hammond announced tax relief against new structures and buildings that allows 2% of the total build cost to be claimed for 50 years after construction is completed. Significantly for poultry producers with older units, refurbishment also falls under the new allowance.
Plant and materials not covered
But the cost of land, legal expense and stamp duty, as well as any expenditure surrounding planning permission will not qualify.
Plant and materials are also not covered by the new allowance, but will continue to fall under the Annual Investment Allowance (AIA), which was raised from £200,000 to £1m from 1 January next year, for 2 years.
Construction of commercial buildings
In addition to the AIA, businesses have long lobbied for a change to the capital allowances system to encourage investment in the construction of commercial buildings.
Specialist adviser Landtax’s Carlton Collister said the new scheme, while not as generous as the historical Agricultural Buildings Allowance, could offer savings to farmers. He explained that contracts agreed after 29th October this year would be eligible for relief against profits at a flat rate of 2% over 50 years, from when the building was first brought into use.
But those who had already commenced construction would probably not qualify for the allowance.
If the buildings are subsequently sold, he added, the allowance would transfer to the new owner.
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