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Jeremy's Blog 5th March 2021: The Budget and Investment

This article by Jeremy Moody first appeared in the CAAV e-Briefing of 4th March 2021.

Yesterday’s Budget heralds two years in which companies will be paid to invest in plant and machinery. An investment that would now have an 18 per cent capital allowance against tax will from next month have a 130 per cent capital allowance (the “super deduction”) and those that would get a 6 per cent allowance will be allowed at 50 per cent.

A lack of business investment has been seen as a key part of the UK’s poor productivity record that besets farming as much as the rest of the economy. With the need for the economy to reinvest, especially but not only in the new technologies, companies are being given the taxpayer-assisted opportunity to equip their businesses as part of the recovery and for the new economy. Success in increasing business investment would then match the Government’s own ambitions for infrastructure, between them increasing the capacity and competitiveness of the UK economy.

As with the continuing measures to sustain the economy in what the Chancellor hopes are the closing phases of the pandemic, this is a policy action that looks simple enough and large enough to stimulate real change. A support for improving business driven by the current predicament, it might not last beyond 2023.

Sadly, this welcome stimulus has two major exclusions:

  • as announced, it does not apply to unincorporated businesses, such as the large majority of farms (and many professional practices)
  • it does not apply to buildings. The Structures and Buildings Allowance remains at 3 per cent (though 10 per cent in the proposed Freeports), whether for slurry and silage stores, new dairies or the buildings for controlled environment farming.


With the long history of governments overlooking unincorporated businesses, the CAAV is now making representations for all businesses to have access to the super deduction.

It is not only Corporation Tax that is rising. Personal allowances and tax thresholds are generally to be frozen, some to 2026, silently taking more money year on year. The £325,000 Nil Rate Band for Inheritance Tax would have then been unchanged for 17 years from 2009.

The overall ambition is the green recovery, the growth that could both pay for all and achieve green targets; the Chancellor stressed that “we need a real commitment to green growth”. This Budget laid more of the strategic underpinnings for the real measures driving the major changes that are to come. We want all businesses to be able to take proper advantage of the support now offered to prepare for them.

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