The AIA will be reduced from £100,000 to £25,000 from April 2012 and the write-down allowance for plant and machinery also cut to 18%. "This means that most farmers who buy a tractor or combine will be worse off and farm businesses that buy a new piece of equipment every three to five years will be worst affected", said Mark Morison, partner at Roger Parry & Partners LLP.

The rise in Capital Gains Tax (CGT) was happlily less than widely anticipated. The actual increase from 18% to 28% for higher rate taxpayers was not as much as the 40% estimated by some reports. "The Chancellor sensibly brought in the rate with immediate effect and the lower than anticipated rate will dampen any significant affect on the land market", says Mark Morison. "Land still retains its inheritance tax status and market scarcity will see the market continue strongly. We now expect clients to finalise their disposal decisions in light of the news."

Entrepreneurs' tax relief was increased from the first £2m of qualifying gain to the first £5m being taxed at 10% and there was also good news for companies as the Corporation Tax rates for small businesses were cut to 20% from 1 April 2011. The tax benefits for landowners with furnished holiday lets were also preserved.

Some of the positives and negatives for the rural sector are summarised below:

Positives

• The annual exempt amount for CGT will continue to rise in line with inflation and will remain at £10,100 for 2010/11

• Increase in the entrepreneurs' relief lifetime limit from £2 million to £5m

• Reduction in the main rate of corporation tax from 28% to 24% over four financial years from April 2011

• National Insurance Contributions threshold raised by £21 a week above indexation in April 2011

• No increase in fuel duty. Government considering a fuel duty discount in remote rural areas

• The personal allowance for under 65s will be increased by £1,000 to £7,475 in 2011-12

• The basic rate limit for income tax will be frozen in 2013-14

Negatives

• Increase in standard rate of VAT from 17.5% to 20% from 4 January 2011

• Capital Gains Tax will be increased from 18% to 28% for higher and additional rate taxpayers

• Reduce the Annual Investment Allowance from £100,000 to £25,000 from April 2012

• Reduce the capital allowances main rate from 20% to 18%, and the special rate from 10% to 8% from April 2012