Mixed-use tax, green heating, black farmers

All new government policies are supposed to be “rural” proofed to ensure that they do not have a disproportionate impact on countryside dwellers and businesses. Proposals to force people not connected to the gas grid to install renewable heating systems – with air source heat pumps the preferred option - if their existing fossil fuel boilers need replacing after 2026 certainly seem to fall into that category. From experience, such pumps work best in well-insulated houses where heat can easily pass from one room to another - not necessarily the case for many cottages and country houses. We all need to tackle climate change, but this proposal certainly requires some rural proofing.

Do get in touch if we can help in any way.

Andrew Shirley, Head of Rural Research

In this week’s update:

• Commodity markets – Omicron worries shrugged off
• Taxation – Mixed-use stamp duty rate under review
• Green energy – Boiler law could hit rural homeowners
• Trade – Lib Dems propose fair trade bill
• The Rural Report – Sign up to watch our ground-breaking video
• Overseas news – Justice for black farmers

Commodity markets – Omicron worries shrugged off

Agricultural commodities and oil prices bounced back strongly last week after dipping due to concerns over the economic impact of the Covid-19 Omicron variant. Oilseed rape was a particularly strong performer. Less welcome was another surge in oil prices. A trip to the petrol station is becoming an increasingly unpleasant experience.

Taxation – Mixed-use stamp duty rate under review

The prospect of a hike in capital gains tax (CGT) for property investors appears to be off the table, according to the government’s response to a review of the tax system. Last November, the Office of Tax Simplification (OTS) proposed aligning rates of capital gains tax with income tax, which would have seen the top rate of CGT rise to 45% from 28%. For investors selling at a gain of £500,000, the move could have added more than £75,000 to their tax bill, depending on their circumstances and income tax band.

However, the government is looking to close loopholes in the stamp duty system that relate to reliefs on mixed-use schemes and multiple dwellings. Under the current system, stamp duty rates are lower for mixed-use transactions but the government is proposing that the tax should be paid on the residential portion of the sale. It is also consulting on changes to prevent multiple dwellings relief from being used on annexes.

Press reports also suggest the government does not plan to remove current inheritance tax reliefs.

For more information read the full article by my colleague Tom Bill, Head of UK Residential Research.

Green energy – Boiler law could hit rural homeowners

Homeowners have until 12th January to respond to a government consultation on the phasing out of fossil fuel boilers for those rural homes that are not connected to the gas grid. Under the proposals anybody whose LPG, coal or oil-fired boiler breaks down after 2026 and cannot be repaired will have to replace it with renewable heating technology, such as an air-source heat pump. Rural advocates like the CLA have branded the move unfair as it kicks in much earlier than the equivalent proposals for grid-connected gas boilers.

Contact our Building Consultancy team for advice on such matters

Trade – Lib Dems propose fair trade bill

Last week I reported on Lord Deben’s strongly worded attack at the CLA Rural Business Conference on the government’s trade deals with the likes of Australia that he said could allow the import of food not produced to the environmental or welfare standards demanded of our own farmers. Liberal Democrat MP Tim Farron has now tabled a private members bill that would guarantee MPs the right to veto such deals.

This year’s edition of The Rural Report, our unique publication for rural landowners and their advisors, launched last month with a video highlighting some of its key content around the topic of ESG. If you missed it, you can sign up to watch on demand at your leisure. It was a lot of fun making it and includes a thought provoking interview on diversity, with Wilfred Emmanuel-Jones AKA The Black Farmer. I think you’ll find it both entertaining and informative.

Sign up to watch The Rural Report launch video

Overseas news – Justice for black farmers

Equality is a key tenet of our values at Knight Frank so I was fascinated to read an article about the Justice for Black Farmers Bill that is currently going through the US Congress. The legislation aims to help African Americans recover the farmland they lost due to decades of discriminatory government policies and would permit black farmers to reclaim as many as 160 acres apiece through a US Department of Agriculture land-grant system.

Photo by Craig Cooper on Unsplash