As the dust settles on Rachel Reeves first budget as Chancellor, the seismic impact on agriculture and horticulture is still being fully digested. While the removal of Agricultural Property Relief has understandably dominated the headlines, numerous other changes from Employer’s National Insurance to double-cab pickup trucks will add significant costs to an industry that in many cases is already on its knees.
Changes to the tax relief on farmland mean that, April 2026 this will be capped at 50 per cent for assets over £1 million. Over the weekend Ms Reeves doubled-down on her claim that “only a very small number of agricultural properties” would be affected. However, based on average land values, almost any farm of more than 27 hectares will be worth more than £1 million. The average farm in the UK is 89 hectares, before any allowance is made for houses, infrastructure and machinery, and the new death tax could cost family farms more than £16,000. Some commentators believe the Budget will have a bigger effect on farming in the UK than Brexit.
According to the NFU and CLA, some 70,000 farms, many of which will be family farms, will be affected by the change. Many people pointed out that tenant farmers stand to be particularly hard-hit by the changes. “It’s been a disastrous Budget for family farmers and especially tenant farmers,” commented NFU president Tom Bradshaw. “The shameless breaking of clear promises on Agricultural Property Relief will snatch away the next generation’s ability to carry on producing British food, plan for the future and shepherd the environment.”
Some farmers, lawyers and accountants said the removal of APR would not be as disastrous as being is painted and could even reduce land prices in the longer term, benefiting family farms. However, many others dispute this. Whatever the truth, succession planning for a range of businesses has become far more import and urgent.
Given the strength of the backlash, much of it directed at Defra Secretary Steve Reed and Prime Minister Sir Kier Starmer personally – Steve Reed’s £420 wellies attracting particular scorn in the press – Defra went on the defensive. After numerous reports quoted the two men, with Reed saying farmers would have to “learn to do more with less” ahead of the budget, and Keir Starmer told the 2023 NFU Conference that “losing a farm is not like losing any other business – it can’t come back.”
In response to the Guardian’s pre-Budget coverage Defra commented, ‘This is a misrepresentation of Steve Reed’s comments and takes what he said out of context… Farming and food security are the foundations of a healthy and resilient economy and environment. This government’s commitment to farmers and the vital role they play to feed our nation remains steadfast.’
Despite confirmation of immediate release of £60 million allocated via the Farming Recovery Fund to support farmers affected by unprecedented extreme wet weather last winter, the rest of the Budget has been extremely negative for farming and food production.
NFU President Tom Bradshaw emphasised, “This budget not only threatens family farms, but also makes producing food more expensive, which means more cost for farmers who simply cannot absorb it and it will have to be passed up the supply chain or risk the resilience off our food production. It’s been a bad budget for farm confidence, which is already at an all-time low. After today farmers, including tenants, have more uncertainty and more worry, not less.”
It wasn’t just the abolition of APR that has incensed farmers. Defra announced that the rate of reduction in direct payments would also be far steeper than expected: ‘For 2025, we plan to apply at 76% reduction to the first £30,000 of a payment, while making no payments for any portion of a payment above £30,000,’ the department said in a statement. This could boost the uptake of environmental schemes with the overall agricultural budget has been maintained at £2.4 billion, but many farmers view it as another attack on food production.
CEO of the Nature Friendly Farming Network (NFFN), Martin Lines, was more upbeat. “Currently, the majority of ELMs funding is directed towards the schemes with the lowest ambitions for nature, placing minimal demands on farmers. This must change, with more ambitious schemes receiving sufficient funds to realise their full potential,” he said. “I particularly welcome the move to open up the Higher Tier of CS, as there have been many problems with it and it has caused a lot of worry, especially for upland farmers for whom balancing environmental outcomes and food production is vital.”
The Budget also contained a number of other measures which will hit farmers and growers. Lee Stiles, secretary of the Lea Valley Growers’ Association, commented, “The increase in Employers’ National Insurance and the wage will simply be passed on to shoppers as the profit margins are already too tight for UK growers.
“These measures will increase the competitive disadvantage that British growers already face from overseas growers who receive subsidies from their respective governments. This can only result in ever decreasing UK food self-sufficiency and higher prices for consumers.
“Prices for next year had already been agreed with supermarkets prior to the Budget, but these will now have to be revisited. The additional tax burden imposed by the government could result on prices rising for cucumbers, tomatoes, peppers and aubergines by an additional 10 to 20 per cent.”
As the industry digested these increased costs, it also became obvious that another of Ms Reeves changes would add further misery to cash-strapped businesses. From April 2025 double-cab pickups, which are among the most widely used farm vehicles, will be reclassified as cars rather than commercial vehicles, which could increase the tax burden by as much as 211 per cent. According to the Countryside Alliance, a typical Nissan Navara Tekna, priced at £33,265 and emitting 167g/km of CO2, will see its Business in Kind (BIK) value rise from £3,960 to £12,308, while the BIK on private fuel benefits will soar from £757 to £10,286.
Robert Sheasby, chief executive of the Agricultural Industries Confederation (AIC), commented, “While AIC welcomes this government’s overarching ambition to drive economic growth throughout the UK, it is concerning to see the tax burden mounting at a time when agricultural supply businesses need the confidence to invest in infrastructure, technologies and systems to boost productivity and enhance sustainability for the future.”
Following an emergency meeting of the NFU Council on 31st October, the union is planning a rally in Westminster on Tuesday 19thNovember.
