David Missen, Head of the agriculture group at MHA, The national association of independent accountants and business advisers gives his reactions to last week's budget announcements: The Budget 2014 has been something of a mould breaker. In previous years most Budget’s topics have been well flagged in advance but this time the Chancellor has pulled two rabbits out of the hat.

The first and most obvious rabbit is the extension of the Annual Investment Allowance to cover periods up to 31 December 2015 and the doubling of the allowance with effect from April 2014. This not only removes uncertainty over what will follow the current temporary allowance but also gives businesses a real opportunity to plan their capital expenditure for the next 21 months in a tax effective way.

The second and even more surprising lepus curpaeums was the announcement of a revolution in the pensions regime. With almost immediate effect it will be possible for individuals taking drawdown pensions to access a larger proportion of their funds. In the longer term there will be a new Pensions Act in 2015 which will remove the principal perceived objection to pension investment – i.e. the fact that it has hitherto been impossible to access the whole fund on retirement.

Such a relaxation in the rules comes at a price, and one can foresee that the Government might enjoy some rather better tax revenues in the future as pensioners are tempted “to raid the kitty” despite the potential increase in income tax. There will also be a sting in the tail: the Chancellor announced that the pension exit charge will reduce from 55% to the normal marginal tax rate but of course the exit charge was a composite figure which included both income tax and inheritance tax whereas under the proposed rules, inheritance tax will potentially be payable on any of the fund which remains after the income tax deduction.

The proposed changes are not, however, all bad news and do give rise to a number of planning opportunities. Farming profits are notoriously volatile and one can foresee the position where the pension pot is tapped from time to time in years of poor profitability when it may be possible to take out quite large sums at quite a modest tax rate or indeed to utilise farming losses against pension income. One could even foresee the position where a loss is created by large machinery purchases and then offset against pension fund withdrawals.

As currently drafted, it would appear that for any individual approaching retirement, pension contributions could potentially be a “win-win” choice. The combination of immediate tax relief on a contribution, a tax free lump sum and the potential to withdraw the fund on retirement will almost always leave an investor with an immediate “profit”. It remains to be seen whether the promised Pensions Act will shut down some of these apparent anomalies.

Finally, were pleased to note that the Chancellor is adding the new Business Payment Entitlements to the list of assets eligible for rollover relief – a necessary amendment!