Spring Budget 2023: 'Pension changes will help farmers plan for succession'

Sean McCann, Chartered Financial Planner at NFU Mutual, said: “We welcome the Chancellor’s decision to abolish the limit to how much you can accumulate in your pension over your lifetime, as it will help farming families plan for succession.

“Pensions provide an independent source of income in later life separate from the farm, which makes it easier for farmers to gradually step away and hand over more of the day to day management to the next generation.

“Pensions are also normally free from inheritance tax, and many farmers use them as a tax efficient way to build up funds that can be left to non-farming children.

“Farmers will also benefit from the increase in the amount they can save in a pension each year tax free.

“Elsewhere, it was disappointing to see the Chancellor leave income tax and child benefit tax thresholds frozen until 2028. With inflation still raging, these stealth taxes will leave many people with less money in their pockets in real terms.”

Pensions and tax:

- Pension lifetime allowance abolished

- Pension annual allowance increased from £40,000 to £60,000 from April

- No changes to frozen income tax thresholds

Chris Walsh, Farm Specialist at NFU Mutual, added: “We’re pleased to see the Chancellor freeze fuel duty at its reduced rate for another year.

“Farmers and rural communities rely more heavily on fuel than their urban counterparts, whether that is using red diesel for agricultural work, or white diesel and petrol for transporting produce around the countryside.

“The £200 million fund announced to repair damaged roads may help fix potholes which are seriously affecting those driving on rural roads.

“It was also welcome news to see the energy price guarantee extended for three months, as households in rural areas had a higher fuel poverty rate (15.9%) last year than those in towns and cities and rural households are on average, less energy efficient.

“The new measure by the Chancellor which will see most parents get up to 30 hours of funded childcare for nine-month-olds to two-year olds, is good news for farmers with young children, provided there are local nurseries offering places.

“The freeze on draught beer duty in pubs will give some confidence to farmers and growers who have diversified their businesses to produce alcoholic draught drinks and those who grow crops to support the rural pub industry. However, non-draught alcohol duty will still be uprated by inflation in August, which could put pressure on the UK’s growing wine sector.”

Fuel, childcare, and alcohol:

- Fuel duty frozen at reduced rate for further year

- Energy Price Guarantee extended extra three months until June

- Childcare support could help farming families

- Freeze on draught beer duty in pubs

In 2022, rural households had a higher fuel poverty rate (15.9 per cent) and a larger fuel poverty gap (£956) than households in towns and cities.