A rise in the minimum wage will increase the cost for farmers. Ulster Farmers’ Union (UFU) president, David Brown, has reacted to the outcome of the recent Autumn Statement from the UK Treasury.

“There are a few measures within the Autumn Statement that will affect our members in Northern Ireland.

“The rise in the minimum wage will increase costs at a time when farmers, especially those who are operating smaller farms, are battling to afford and retain the necessary labour.

“Considering the average size of a family farm in Northern Ireland, this change will have implications for many of our members,” Brown said.

“The chancellor also mentioned that the government is currently reviewing the responses to the consultation on the taxation of environmental land management and ecosystem service markets.

“This is an important consultation setting the parameter and directions for land tenure in the UK as a whole. We will review the outcome when further detail is provided early next year,” the president added.

Tax changes apart from minimum wage

According to Omagh-based accountant, Seamus McCaffrey, a number of the tax changes announced in the Autumn Statement will impact positively on farming businesses in Northern Ireland.

“There were a number of tax-related changes announced, all of which will impact in Northern Ireland,” he explained.

“A company can now claim 100% of the cost of new plants and machinery, thereby reducing company taxable profits and saving the company corporation tax at 25%.

“Where a company is proposing to incur significant capital expenditure, careful planning, and detailed consultation with the farm’s accountant, they may be rewarded with attractive tax savings.”

For self-employed farmers, the Autumn Statement announced the abolition of £3.45 per week Class 2 National Insurance charge for profits more than £12,750 in a year.

Farmers are currently paying class 4 national insurance charges on profits between £12,570 and £50,270 at the rate 9%. This figure is to be reduced to 8%.

“Another big change in relation to national insurance for employees, is a reduction from 12% to 10% from 6 January 2024,” McCaffrey continued.

“These changes create an opportunity for farmers who employ themselves through a company structure to discuss with their accountant as to how they might benefit, particularly in relation to salary versus dividends.”

For companies who spend money on eligible research and development, the system of corporation tax reliefs has been simplified.

“Making tax digital for sole traders and partners in a partnership from 2026 will be simplified.

“From April 1, 2024, the national living wage will increase from £10.4/hr to £11.44.

“In addition, the age at which the national living wage applies has been reduced from 23 to 21. The national minimum wage for 18–20-year-olds has increased from £7.49 to £8.60 and for 16–17-year-olds and apprentices from £5.28 to £6.40,” McCaffrey explained.