Government has announced the Autumn Budget, as industry finds the changes will add costs to “already steep margins”.
Chancellor Rachel Reeves revealed changes to the inheritance tax for UK farms, stating that from April 2026, the first £1 million of combined business and agricultural assets will continue to attract no inheritance tax at all, but for assets over £1 million, inheritance tax will apply with 50% relief, at an effective rate of 20%.
Government also announced the farming budget will remain at £2.4 billion for 2025/26.
AHDB reports industry at “tipping point”
David Eudall, Agriculture and Horticulture Development Board (AHDB) Economics & Analysis director, said: “The funding pot for agriculture in the UK has remained constant at £2.4 billion since the 2019-24 parliament. During this time, inflation has led to a 44% increase in farm costs while the agriculture budget remains the same. We are at a tipping point of how effective this budget can be in meeting the desired outcome of balancing food security, supporting farm efficiency, and delivering environmental benefits given the inflationary pressures we see.
“The impact of the changes to inheritance tax means that from April 2026, a farm worth £2 million will have a £200,000 tax requirement to pay on the £1 million above the threshold. For every additional £1 million the farm is worth, a further £200,000 will be required to be paid in inheritance tax.”
BMPA says effects of farm inheritance tax will not be easy to predict
A spokesperson for the British Meat Processors Association (BMPA) said: “The UK meat industry is very people intensive and runs on wafer thin margins, so the hike in employer costs will undoubtedly add to already steep cost burdens imposed by Brexit.
“Less easy to predict will be the unintended consequences of the new farm inheritance tax which could mean a cliff edge of farmers selling up and getting out of the business altogether. If this happens, we can see this would accelerate the drop in livestock production that we’ve been warning about in our recent Meat Industry Manifesto, with a consequent reduction in food security.”
A “bad Budget for farm confidence” says NFU
President of the National Farmers’ Union (NFU), Tom Bradshaw, said: “This Budget not only threatens family farms but will also make producing food more expensive. This means more cost for farmers who simply cannot absorb it, and it will have to be borne by someone. Farmers are down to the bone and gristle, who is going to carry these costs?
“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.
“When you look farmers in the eye and make them a promise, keep it. The shameless breaking of those promises on Agricultural Property Relief will snatch away much of the next generation’s ability to carry on producing British food, plan for the future and shepherd the environment.
“It’s clear the Government does not understand that family farms are not only small farms, and that just because a farm is a valuable asset it doesn’t mean those who work it are wealthy. Let’s not sugar-coat this, every penny the Chancellor saves from this will come directly from the next generation having to break-up their family farm.
“This is one of a number of measures in the Budget which make it harder for farmers to stay in business and significantly increase the cost of producing food.”
AIMS warns of “uncertainty” in livestock sector
A spokesperson for the Association of Independent Meat Suppliers (AIMS) said: “It was clear from the Budget that neither farming nor food production and processing, is now an area of little interest to the Government. Their announcement that existing farm schemes will be subject to review is concerning and brings with it uncertainty to the livestock farming sector.
“We are also disappointed to see that the Industrial Strategy is focusing on eight growth-driving sectors but excludes both food and agri-tech from this group.
“AIMS do welcome the announcement of ‘£208 million across 2024-25 and 2025-26 to support the transformation of the Government’s biosecurity facilities at Weybridge. This will enhance our ability to respond to the threat disease outbreaks pose to health, farming, food security, trade, and the economy’. However, the added burden on employer national insurance contributions may well stall investment into their businesses.”
