The Autumn Budget and Changes to Agricultural Relief

The recent UK budget has made waves across various industries, and few are feeling the impact as severely as UK farmers. The significant change causing concern is the reduction or removal of agricultural reliefs that have long been a pillar of financial stability for farmers.

Agricultural reliefs have historically offered tax breaks to farmers to offset costs and promote farming resilience, but with these benefits now being removed, the ramifications could be far-reaching for the sector and the rural communities that rely on it. The first £1m of combined business and agricultural assets will attract 100% relief, but for over £1m, inheritance tax (IHT) will be applied with 50% relief from April 2026.

Agricultural relief has up to now been a valuable tool for UK farmers. Typically, qualifying farmland and buildings could benefit from up to 100% relief on IHT, allowing families to pass on these assets without crippling tax debts. This relief was designed not only to protect farmers but to ensure the preservation of the countryside, rural economies, and food security. With the removal or reduction of these reliefs many farmers now face increased financial challenges that could threaten the viability of their operations. Without the relief, farmers inheriting land and assets will face potentially steep inheritance tax bills.

For family-run farms, where assets are often tied up in land, machinery, and livestock rather than liquid cash, finding the funds to pay these taxes could be difficult. This pressure may force some farms to sell off parts of their land or other essential assets, which can undermine the overall viability of their businesses. For smaller farms this change could be devastating.

The removal of agricultural relief in the UK budget represents a significant shift that threatens the financial stability of UK farmers. While large agricultural businesses may have the resources to weather these changes, smaller farms could struggle, leading to a potential restructuring of the industry that could weaken the UK’s food security and impact rural communities.

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The information and opinions contained in this blog are for information only.  They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice.  Before acting on any information contained in this blog, please seek solicitor’s advice from Gilson Gray.