Tax reforms vital for rural Scotland’s future.

Scottish Land & Estates (SLE) is calling on the UK government to implement key fiscal reforms in the upcoming budget to support rural communities, address climate change, and ensure the sustainable future of the rural economy.

In a pre-budget submission, SLE highlighted several critical areas that require government action, including rural housing, farming, tourism, and land management, all of which are deemed beneficial for the entire UK.

Among the key requests from SLE are:

  • Rural Impact Assessments: SLE is advocating for the introduction of Rural Impact Assessments (RIAs) to ensure that all government policies are developed with rural communities in mind. These assessments would guarantee that rural interests are fully considered and protected.
  • Tackling climate change: Extend Agricultural Property Relief (APR) from Inheritance Tax (IHT) to include land used for environmental management, like peatland restoration and woodland creation. This move would provide support to farmers and landowners actively engaged in sustainable land management practices to combat climate change.
  • Affordable rural housing: SLE is proposing the removal of VAT on the conversion of unused rural properties and new affordable housing developments. The high taxation on rural housing development is currently hindering efforts to address Scotland’s housing crisis.
  • Food and farming: SLE is calling for the creation of a five-year agricultural funding package to enable farmers to plan for the future with confidence. This funding would support investments in climate-friendly practices, food production, and nature restoration.
  • Tourism: SLE is advocating for the reversal of the abolition of favourable tax treatment for Furnished Holiday Lets, which has been crucial for many rural businesses. Tourism plays a significant role in the economic vitality of rural Scotland.
  • Farm Tenancies: SLE suggests exploring ways to incentivise new entrants into farming through farm tenancies using the taxation system.

Jackie McCreery, legal adviser at Scottish Land & Estates, emphasised the importance of supporting rural communities, which often face challenges that are overlooked by policymakers. She highlighted the opportunity presented by the upcoming budget to reset the relationship between rural economies and government policies.

Ms McCreery stressed the need for the Chancellor to maintain the current reliefs from Inheritance Tax for family businesses, specifically Agricultural Property Relief and Business Property Relief. Family farms are essential to rural areas, and maintaining these reliefs is crucial for the future of the rural economy, food production, and biodiversity.

Furthermore, Ms McCreery underscored the significance of housing issues in rural Scotland and proposed measures to incentivise affordable housing development to alleviate the housing shortage in these areas.

Scotland’s rural landowners are taking steps to combat climate change through initiatives like peatland restoration and woodland expansion. However, they require clarity and government support to continue these efforts effectively. SLE is urging the UK government to recognise commercial native woodland projects under the tax system for their environmental and economic benefits.

Ms McCreery concluded by highlighting the need for rural needs to be at the forefront of national planning, emphasizing the importance of decarbonising homes and supporting agricultural innovation to bridge the gap between urban and rural Scotland.

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