The Budget has stung farmers with an increase in car tax for band-G vehicles and increases on red diesel duties, according to the National Farmers’ Union (NFU), but also offered a number of opportunities.

The Vehicle Excise Duty for band G will see an increase from £210-230 to £300 this year and a further £100 increase to £400 by next year.

But only vehicles registered from March 2006 are included which means that farmers with older 4x4s will not be affected.

NFU President Peter Kendall said: “Although I understand the principle, some of the vehicles affected by the tax increase are essential to work within the agricultural industry and I will be pressing government to recognise the important and legitimate use of off-road vehicles.”

The NFU is calling on the government to find a way to preserve the legitimate use of working vehicles, as 4x4 vehicles are used for essential farm work.

Red diesel tax will increase by two pence per litre from October. The NFU said it was disappointed at the disproportionate increase facing farmers and growers as increases in the following two years will see red diesel taxes rising by the same percentage as other types of fuel.

But the Budget has brought some good news for the sector, according to the NFU.

The duty rebate for biofuels will be retained at 20p per litre until 2010.

The two-per-cent discount announced in the percentage of the list price used in calculating the taxable benefit for company cars running on E85 ethanol had been called for by the NFU.

Farmers will be able to take advantage of extra spending for science and technology with emphasis on environmental transport, VAT rebates on energy saving equipment and increased emphasis on environmental capital investment, according to the NFU.

There will be further incentives for development of the biofuel industry and links with other countries around the world to ensure biofuels are produced in an environmentally sustainable way.

Opportunities for farmers to provide fuel for rural homes will be created by the tax relief introduced for energy efficient homes, with carbon neutral housing receiving exemption from or reduced stamp duty.

Kendall said: “This budget aims to prepare the country for the environmental challenges that lie ahead. Farmers and growers are ready and able to offer solutions to these problems. I agree with the Chancellor that these solutions need to be delivered through good information and incentives if they are going to be effective.”

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