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The Autumn Budget was announced on 30th October, the first to be delivered by Chancellor Rachel Reeves of the new Labour Government.

What does this mean for farmers and landowners?

At the time of writing, I list the changes below:

Inheritance tax

There is no denying that the inheritance tax changes will have a significant impact on rural business and family farms. Firstly, there is the one positive change which had already been proposed by the previous Government which is that Agricultural Property Relief (APR) should include land in environment land management schemes. This will now come into effect from 6th April 2025.

The major negative change, and the one attracting most interest in the press, is that from April 2026, inheritance tax will apply for assets of over £1 million. This will be at a relief rate of 50%, giving an effective tax rate of 20%. Each person will in addition have their nil rate band of £325,000, which can increase to £500,000 with certain very strict criteria.

The first £1 million of assets remain tax free and then tax will be payable on the remainder of the value in relation to the deceased interest within the farm. This includes machinery, livestock, seed, fertiliser, growing crops, crops in store, hay, straw, silage, grain stores, milking parlours, etc – basically everything on your farm and not just land and property. It is important to note that these assets will be valued at the market value, not the value in your accounts. It is also worth noting that if there are tenancies where the deceased had an interest, the value of their share will be considered a business asset. It is clear to see that £1 million will not go far for many farmers and landowners, despite the Government’s current figures to the contrary.

From 2027, pensions will also be included in inheritance tax assets.

Other changes which could impact farmers and agricultural businesses:

Reduction in de-linked (ex-Basic Payment Scheme) payments – from 2025, the maximum payment will be £7,200 per annum. We have no information yet on whether there will be further payments beyond 2025.

National minimum wage – will raise to £12.21 per hour in April 2025, a 6.7% increase.

Employer national insurance contribution – will increase to 15% in April 2025 with the threshold cut from £9,100 to £5,000. The extra cost of employing staff needs to be factored into your cashflow.

Double cab pick-ups – will be treated as cars for the purposes of capital allowances moving forward.

Carbon borders tax on fertiliser – from 2027, there is likely to be a £50-£75 per tonne cost added to imported fertiliser, which will add a further cost to growing crops and lead to an extra cost compared to imported crops.

What should you do now?

• Seek professional advice from the outset to successfully plan.
• List and value your assets. Correct valuation here will be important as the District Valuer acting for the taxpayer will now become very focused on these valuations with the amount of tax that is expected to be raised. Having an independent valuation to look at your assets could be useful for this part.
• Review the business structure and who is involved within the business. There may be options, however these will vary for each circumstance, and what is right for you may not be right for others. Every situation is different and so a tailored solution will be needed for all.
• Passing assets on to the next generation must be balanced with the other big “d”: the risk of divorce.
• Consider carefully the use of Trusts. Trusts, sometimes used in succession planning, incur a 10-year charge, so this does not necessarily mean tax payments can be reduced overall and can incur tax charges on entering and removing the asset.
• Take time to think through gifting. Whilst the temptation may be to gift, avoiding double taxation will be key which can occur on some assets if the person making the gift does not survive the 7 years.

A balance needs to be struck between the natural human reaction of either making knee jerk changes or ignoring it entirely and burying your head in the sand. With a consultation next year and the changes being brought in from April 2026, there is time to look carefully at all the options. The Government may yet alter the details, but that is not to say people cannot and should not start to make plans now. The focus needs to be on what is right for the business and individuals within that business.

One area which seems to be being ignored by large parts of the media is the way the changes affect the whole business. Many contractors and tenant farmers will have more than £1 million of assets given the value of modern machinery, crops in store and livestock. At times this will vary throughout the year, and it may be an easy place to start to give the next generation more control. Equally, the structure of debt is going to be important moving forward, with the banks moving away from lending solely to the older generation.

With a lot of concerned people out there, speak to those you can trust, whether it be a family member, friend or advisor. Everyone will have a view, with some better informed than others, but hearing those views and having time to make decisions, even if the decision is to make no changes, is vital for good business management.

Difficult conversations need to be had about whether your business is performing to its maximum and what changes need to be made.

At Robinson & Hall, we have worked with farmers for generations, and our expertise puts us in good stead to help and advise you. Please contact us to discuss further.

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