South West farmers may have breathed a sigh of relief after Chancellor George Osborne announced in his Budget that Inheritance Tax allowances would remain intact.

Views on the budget were mixed but were mostly favourable for agriculture.

Many of those involved had expected a review of Agricultural Property Relief (APR), but farmers and landowners escaped relatively unscathed.

Catherine Vickery, rural tax specialist at Old Mill told South West Farmer. “We were expecting APR, particularly on farmhouses and rented land, to be attacked, but it hasn’t happened, which is great news.”

Landowners may also benefit from an increase in the limit for Entrepreneur’s Relief, which reduces Capital Gains rate to ten per cent on eligible sales up to £10m in a lifetime – double the previous limit of £5m. “This is good news for farmers selling land for development,” she said.

A surprise two per cent decrease in the rate of Corporation Tax, to 26 per cent from April, and stepping down to 23 per cent over three years, would help farmers with limited companies.

Of considerable concern in the region was the recent increases in fuel costs with farmers spending hundreds of pounds each time they filled their tanks with diesel.

The 1p/litre cut in fuel duty in the budget will be welcome, as will an increase in the business mileage rate from 40p/mile to 45p.

With diversification much in mind, some farmers with rental units will benefit from a year’s extension in the small business rates relief, but holiday properties will need to be available, and let, for longer periods to qualify for furnished holiday allowances from April 2012.

Miss Vickery said as capital allowances had also been tweaked: “Given the burst in renewable energy schemes, more items have been added to the Enhanced Capital Allowance list, which provides 100 per cent tax relief. But Mr Osborne confirmed that the Annual Investment Allowance, on capital expenditure up to £100,000 a year, will fall to just £25,000 from 2012 – so farmers who are planning big expenditure on machinery and plant should make sure they do it in the coming year.”

NFU President Peter Kendall said the government must ensure it enables rural businesses to contribute to its drive for growth. “As always, as we examine the details, we get a clearer idea of how this budget will help farming become more competitive and play its part in rebalancing the economy and driving growth,” said Mr Kendall. “Overall, this is a budget that speaks much about supporting private sector growth across the UK. This is essential, but it is important that the government ensures its focus extends beyond urban and incorporated businesses, and enables rural businesses to contribute to this drive for growth.”

The CLA also welcomed the commitment to reforming the planning system with a new National Planning Policy Framework but stressed that legislation would be needed.

President William Worsley said: “The chancellor is absolutely right to make this commitment to enforcing a presumption in favour of sustainable development. However, unless it is included in a Bill it will not have legislative force.

“Done right, it would encourage necessary development in the countryside to help rural communities survive and thrive. We broadly welcome his expectation that all planning bodies will prioritise growth and jobs, and the removal of nationally imposed targets on the use of previously developed land.”

Mr Worsley said it was right that the Chancellor had highlighted the substantial increase in the cost of the planning system over the past five years, its excessive bureaucracy, and promised a “12-month guarantee for the processing of all planning applications including any appeals”.

The CLA President added: “Red tape should be cut, but the planning system also needs to be properly resourced. Without proper funding and the right legislation in place, the chancellor’s good intentions for the planning system will not become a reality.”

A spokesman at Savills said the chancellor had “at last put the property industry out of its miser” following the speculation on how he is going to balance the books.

“A carefully crafted budget has allowed the bad news headlines to be kept to a minimum whilst savings are made through a squeeze on benefits and the public sector,” said Simon Dixon Smith.

“Farmers and landowners have enjoyed a surprisingly benign capital tax regime under Labour. They must now play their part in getting the country back on its feet. Forward planning will allow future liabilities to be kept to a minimum. The short-term change in CGT may drive up land prices further.”