Crops are largely in, weather has been largely kind and stuff is mostly just getting on with growing. Which has given us and all farmers a lot of headspace to think and be shocked by the budget announcements and the impact on farming. These are significant, whichever way you look at them.
Firstly and somewhat under the radar, the government has slashed the final few “Basic Payment Scheme” grants that farmers were receiving in 2025, 2026, 2027. These have been gradually reducing since we left the EU and were due to finish entirely by 2027, but the Conservatives had outlined a more gradual linear reduction in payments. This has now been capped. Whilst predicted long term, this unexpected change will bring challenges in the short term. At work, we were expecting to receive a payment of £22k in 2025, this will now be £7.2k which is significant.
The main headline though is the shift in Inheritance Tax. Previously farming assets could be passed down throughout generations without inheritance tax. This allowed family farming businesses to continue. The value of land is huge (“they aren’t making any more of it”) compared to the money made from farming it. The return on investment for farming the land round us is less than 1%. This is a result of high land prices and low grain prices decided by a global market.
Under the new rules, up to £1million worth of assets can be passed down generations and the rest is taxed at 20%. This is unaffordable for family farming businesses and there will be a wide range of different consequences. Land needing to be sold, farms lost, businesses becoming unviable. There is large pressure to try and get the thresholds changed to make it workable for family farms to continue. Watch this space, hopefully there might be more to report.
Weather… “normal” winter weather would be fine.