Budget 2007 - Farming and Estate Summary

Indirect Taxes

Aggregates

Increases in the aggregate levy will hit businesses that extract aggregate on a commercial basis. For any aggregates removed on or after 1 April 2008, the rate of levy will increase from £1.60 per tonne to £1.95 per tonne

Hydrocarbon Fuel Duty Rates

Duty rates for hydrocarbon fuels will increase by 2 pence per litre from 1 October 2007. Although the increase also applies to rebated fuel (red diesel), the current rebate is being maintained. The current duty differential of 20 pence per litre for biofuels is being maintained and will be extended until 2009/10.

Carbon Neutral Housing

A new relief for Stamp Duty Land Tax (SDLT) on carbon neutral homes is being introduced from 1 October 2007. New homes with a purchase price of up to £500,000 which on average are designed to be carbon neutral over a twelve-month period will be exempt from SDLT. New homes with a purchase price in excess of £500,000 will have their SDLT liability reduced by £15,000. This relief will expire on 30 September 2012. Future developments will need to consider the benefit of this relief against the additional cost of meeting the standard.

Landfill Tax

Landfill tax is being increased from 1 April 2007. The standard rate is increasing to £24 per tonne, up from £21 per tonne. A further increase to £32 per tonne takes effect from 1 April 2008, when the rate for inert waste will also increase from £2 to £2.50 per tonne.

VAT

Where all VAT has been recovered on an asset that will be used partly for the purpose of the business and partly for non-business purposes, an adjustment for the private use is due on an ongoing basis. For land and buildings, HMRC's current policy is that the VAT charges for non-business use is spread over 20 years. From 1 September 2007 the period over which the adjustment is due will reduce to 10 years. This will result in a reduction to the cash flow benefit which is achieved.

It is proposed that certain alterations to dwellings for the elderly will qualify for the reduced rate (5%) rather than the standard rate (17.5%) from 1 July 2007.

In Summary:

• £400 car tax on the most polluting cars from 2008.
• ABAs abolished by 2010/11.
• 28% rate of tax from 2008 for large companies.