Budget boost for rural tourism and forestry

Kate Forbes delivered the Scottish Budget for 2021-2022 on January 28. It is a budget through which the Scottish Government plans to drive economic recovery, bolster public services and support families, with a £1.1 billion funding package to support jobs and skills announced.

Most of the measures announced in the Budget will have an impact on every business, including those trading in the rural sector.

The Budget, being a balance between revenue collected and public expenditure, has sought to take account of the ongoing expenditure required to address the current coronavirus pandemic.

With so much support being offered, many business owners may be concerned that tax paid by businesses and individuals will increase, to aid the revenue collected by the Scottish Government.

In the March 2020 UK Budget, the UK Government pledged not to increase rates of Income Tax, National Insurance (NIC) and VAT in its parliamentary term, so VAT, NIC and the rest of UK income tax rates remain as they are. This was reiterated by Kate Forbes in the Scottish Budget.

However, bear in mind that there continues to be a difference in tax rates between Scotland and the rest of the UK for non-savings/non-dividend income (NSND), with those on lower incomes benefiting marginally north of the border.

Most Scottish bands will increase in line with inflation, which will affect a small decrease in tax paid per individual in 2021-22.

The Scottish top rate of tax (46%) continues to be charged on NSND income over £150,000. Any changes to corporation tax rates will be announced in the UK Budget on March 3.

So, what are the support measures announced for businesses?

For those businesses that have diversified, and with the expectation that much of the UK population will be ‘staycationing’ again this year, the Budget has allocated double the amount of funding available from the Rural Tourism Infrastructure Fund.

This fund is in place to help tourist attractions and local communities make improvements to cope with expected increased visitor numbers.

For those who benefited from non-domestic rates relief recently, if your business was eligible for the retail, hospitality or leisure 100% rates relief, this is to be extended by another three months.

Another piece of good news on non-domestic rates is that the Basic Property Rate (‘poundage’) is being cut to 49 pence, the same as in 2019-20.

For those who are considering putting more of their poorer land into trees, an additional £27m of funding is available to expand woodland creation and the associated infrastructure.

The Scottish Government has a target of increasing the hectarage of trees by 50% from 12,000 to 18,000 by the middle of this decade and the funding announced will go some way to support this.

With business support remaining a priority, the Local Authority Discretionary Fund will be doubled to £60m, which will allow councils to respond to local needs.

The key figure that most farming businesses look at when the Budget is announced is the support that is given to the agriculture industry, which is devolved to the Scottish Government.

For the 2021-2022 Budget year, the support amounts to £801m, which is a significant increase on the £598m for 2020-2021. Of the support, Pillar 1 and LFASS budget combined increases by around £49m.

Whilst the funding is to provide ongoing stability to the sector, driving the transition to Scotland achieving net-zero greenhouse gas emissions is also a priority.

Scotland’s net-zero target has been set to be achieved by 2045, five years earlier than the target set by the UK Government, and is said to be the biggest change likely to impact the sector.

SUPPORT: With much of the UK population expected to holiday at home in 2021, rural tourism funding was increased.