he Autumn Budget 2024 introduces significant reforms that risk undermining British agriculture, raising concerns about the future of family farms and food security. Although framed as necessary updates to inheritance and agricultural property tax reliefs, these measures, combined with cuts to traditional farm support schemes, are viewed by many as a direct blow to British farmers.
Inheritance Tax: The Burden on British Farms
The Budget’s decision to limit Agricultural Property Relief (APR) and Business Property Relief (BPR) to a capped £1 million with only 50% relief thereafter has sparked criticism, particularly from the National Farmers’ Union (NFU). NFU President Tom Bradshaw has voiced concerns that these changes, combined with the accelerated removal of direct subsidies, could devastate family farms. “This Budget not only threatens family farms but will also make producing food more expensive,” he noted, warning that the added costs will inevitably trickle down to consumers.
Bradshaw highlights a critical point: British farming has faced a decade of squeezed margins, cost inflation, and erratic weather events. In this context, APR and BPR reform feels like a breach of trust. “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.” The NFU fears these reforms will force many family farms to sell or divide their land, thereby stripping the next generation of their ability to continue farming.
The government’s rationale for APR reform – better targeting reliefs to productive assets – fails to consider that family farms are often valuable assets yet yield modest incomes. As Bradshaw points out, “Just because a farm is a valuable asset doesn’t mean those who work it are wealthy.” Inheritance tax reforms may save the government money, but “every penny the Chancellor saves from this will come directly from the next generation having to break-up their family farm.” This measure, intended to close perceived loopholes, ultimately threatens the very fabric of family-run agriculture in the UK.
Rising Costs and the Removal of Farm Support Schemes
The accelerated phasing-out of direct payment schemes compounds the pressure on farmers. Large farms, which received over £100,000 in direct payments in 2020, will see payments reduced to a mere £8,000 by 2025. This loss of traditional support leaves many farmers scrambling to adjust to new, often restrictive, replacement schemes. For many in the agricultural sector, this Budget signals an erosion of financial stability, with smaller and family-run farms feeling the brunt.
Further compounding the challenges is the rise in employment costs, particularly a 6.7% increase in the National Living Wage, which now stands at £12.21. This is coupled with a 16.3% increase in the minimum wage for younger workers. While these wage increases reflect inflationary pressures, they will add to the operational costs for farmers who are already “down to the bone and gristle,” as Bradshaw describes. Farmers face the dual pressures of increased payroll and supply chain costs, making it harder to remain competitive, especially against imported goods with lower production costs.
Food Security Concerns and Limited Relief
The NFU warns that these policies pose a direct threat to the UK’s food security. If farms struggle or go under, Britain’s reliance on imported goods will grow, with potential repercussions on food prices and availability. Bradshaw’s words resonate here: “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.”
While there is a glimmer of relief with the £60 million Farm Recovery Fund – a £10 million increase to support those impacted by recent extreme rainfall – and confirmation of a maintained agricultural budget of £2.6 billion for England, the broader policies still seem insufficient to safeguard the future of British agriculture.
A Grim Outlook for British Farms
Ultimately, this Budget exemplifies a shift in government policy that prioritises cost-cutting over sustainable support for farming. The NFU’s critique highlights a fundamental disconnect between policymakers and the realities faced by British farmers. The promise of targeted support rings hollow when reliefs like APR are restructured in a way that penalises family farms.
The pressure now falls on the government to reassess its approach and bridge the gap between fiscal policy and agricultural sustainability. For those navigating these turbulent times, Jack Ross Chartered Accountants can provide guidance and strategies to mitigate these impacts. Contact us at 0161 832 4451 or visit www.jackross.com for personalised advice.