Welcome to the Winter edition of our Agricultural Journal
On behalf of the Agriculture and Landed Estates team, I am very pleased to present to you the Winter 2024 edition of Ryecroft Glenton’s Agricultural Journal.
Rachel Reeves recently delivered her UK Budget and introduced measures that could significantly impact agriculture. This Budget has caused understandable concern and shock throughout the agricultural and business sectors. This edition focusses on the main issues and provides some thoughts on the potential impact along with planning opportunities.
The key impacts on agriculture:
- Changes to Agricultural Property Relief (APR) and Business Property Relief (BPR): APR and BPR combined will now be capped at £1 million, making it harder for farming families to pass down farms and farm businesses without incurring heavy inheritance taxes. This policy has been criticised for potentially jeopardising intergenerational farming and adding financial strain to smaller family farms, despite aiming to target wealthier landowners.
- Agricultural Subsidies: Direct subsidies remain under scrutiny. While no immediate cuts were proposed, concerns have been raised about a potential reduction in the £2.4 billion budget for farming due to historical underspending. This creates uncertainty for farmers already dealing with labour shortages and rising costs.
- Fuel Duty: The continuation of the fuel duty freeze and the retention of a 5p reduction will offer some relief to farmers reliant on fuel for machinery and transport.
- Labour Costs: A rise in the national minimum wage to £12.21 in April 2025 could increase operational costs, particularly for farms employing seasonal or low-wage labour. Increased employer National Insurance will also add to this burden.
Organisations such as the National Farmers’ Union (NFU) and other agricultural bodies have expressed great concerns about reduced tax benefits and the lack of targeted support for smaller farms and are calling for:
- A reconsideration of tax reforms to better accommodate the unique challenges of farming.
- Greater clarity and consistency in subsidy allocations.
- Policies that balance environmental goals with financial viability
Critics argue that these changes could lead to reduced rural employment and harm food production.
The farming sector faces a challenging period, as these fiscal reforms coincide with broader issues like climate change, market volatility, and labour shortages. Advocacy groups are lobbying for policies that better balance fiscal responsibility with the sustainability of British agriculture.
Although we still await the finer detail of the legislation, with consultations announced for early 2025, particularly on the application of inheritance tax changes affecting trusts, it is important to start thinking about your own position, what your strategies are for the future, and to have those difficult succession discussions. Please speak with your advisers to make sure you are able to put yourself into the best position possible.
