Richard Furnival gives his thoughts on the recent budget for the Farmers and Landowners

Chancellor Rachel Reeves has delivered her Autumn Budget after weeks of speculation and it’s fair to say this Budget has sent huge shockwaves through the rural sector and could have major long-term implications for both landowners and farmers.

To me it feels a poorly thought-out budget and a clear signal that farming, and the rural environment are very low down on this government’s priority list and will not be getting any special treatment. In fact, there will be far less support going forward, despite the pledges and assurances that they gave only a few months ago.

From April 2026 Agricultural Property Relief (APR) and Business Property Relief (BPR) rules change so there will only be 100% relief on the first £1m of assets combined and then 50% relief on assets thereafter, which equates to an effective tax rate of 20% on anything above this value. From initial readings it seems that this will also combine the asset of land, farm dwellings, machinery, livestock and other farming assets which just rubs salt into an open wound.

The Government has naively said the aim is to restrict the generosity of APR and BPR for “the wealthiest estates”. Sadly, with the £1 million nil rate band, applied after any other general reliefs, this will affect the vast majority of farmers and landowners with only the very small farms being able to fall under this and be transferred free of IHT. The tax implications on even an average sized farm could be significant and hit working farmers and their families very hard.

We do not have all the details yet, but the change has significantly increased the potential IHT liability on almost all farms, so we are going to have to think hard and encourage a change of mindset for some. Good advice will be important, and we are likely to see a lot of tax and business planning to understand the changes and to try to reduce the increased liability and potentially a lot more transfers with a “warm hand”.

As if the changes to APR and BPR were not enough, the direct support payments are being phased out even faster, the Government via Defra announced a much more rapid phasing out of the de-linked BPS payments for farmers in England than was previously expected.

Most farmers had been expecting a continuation of the existing path to a zero payment by 2028. However, now, no farmer will receive more than £7,200 from next year. This will clearly have a negative effect on farm businesses’ cash flows and profits. It is loud and clear from this government that farming is a business and like any other business with access to public money, the money will be spent for public purposes and clear expecting outcomes – they need to be very careful what they wish for.