All too rarely do fiscal and farming experts agree, but the exception came at the beginning of November when Agriculture Minister John MacGregor announced that CGT roll-over relief will be introduced in next year’s Finance Bill for milk and potato quotas. This relief, which will be available for quotas changing hands after midnight on Thursday October 29, was widely welcomed by all elements of the agricultural industry.
Of particular importance is the change in dairy quotas, where the position has for some time been clouded as the quota value has assumed the status of a valuable individual business asset. Now, with clarification, more quota may well come on to the open market, with prices being more variable as a result.
“It did seem to me that the absence of roll-over relief placed a heavy burden on some farmers and was clearly inhibiting the development of the industry,” the minister declared. “I am delighted the change has been announced now, well in advance of next year’s budget, as this will help farmers concerned over the coming months.”
The change means that a farmer moving from one farm with quota to another farm will no longer be required to pay CGT on the value of the quota: this will be deferred where a new business asset is acquired.
As to the effect on quota prices, Rupert Montefiore of Savills expects little change in values, which he predicts will continue to rise for the next couple of years. “However, both for the sellers and buyers of quota, there will be greater liquidity in that there is now no disadvantage in selling quota separately from land.”
The sale of dairy farms will now also become more flexible. An inhibiting factor affecting such holdings in recent years has been the extremely high price thrown up by the additional value of the quota. “There is now no reason why the vendor cannot sell such farms either with or without quota, thus realising the full value of the quota as a separate asset,” Savills comment.
