Autumn Budget 2024 Summary

Redistribution of wealth in ‘smash and grab’ Budget raid on employers, farmers, landowners and business.

The majority of UK farming sectors are facing break-even or negative margins on food production.

Yet the government has imposed a stealth tax on employers National Insurance Contributions (NIC) and announced that all recipients of the Basic Payment Scheme (BPS) in England will have 76% of their base amount removed in 2025.

The Chancellor’s cap on Agricultural Property Relief (APR) and Business Property Relief (BPR) is a huge threat to long term business ownership.

Farmers, landowners and consumers who value UK-grown produce and our managed countryside should be deeply worried.

This Budget feels like wealth transfer in the making and is a serious threat to UK agriculture and food production.

Inheritance tax (IHT)

Between now and April 2026, any reasonably sized UK farming business, or owner of business assets, will be rightly concerned about how the operating business is passed to the next generation without incurring the new 20% IHT charge on all asset valued over £1m.

This £1m cap in fact equates to the same IHT nil rate threshold that will apply to a couple’s private family home under the proposed new £500,000 per person exemption that will be introduced in April 2030 for the whole population when leaving their family homes, their estates, to their children.

Those of us in business, especially farming businesses, understand that land management and farming is a long term business, whether we are managing farmland for food production or for environmental benefit, be that flood mitigation, erosion control, carbon sequestration, public access, or tourism.

Family farming businesses generally operate on wafer-thin operating margins.

They now typically face severe challenges from climate change with extreme weather events increasing the risk of crop failure, disease or loss, huge inflation in production costs, and a retail sector backed by government policy that seeks to maintain a policy of cheap food.

Our farmers must compete with imported products that often come from overseas where producers do not have the same level of environmental and welfare compliance as our UK legislation and production standards demand.

When we apply the calculations from the new tax changes to a farming business they make worrying reading.

Taking the example of a 400-acre UK farm which might have a value of £4m. From initial calculations in April 2026 it faces an IHT tax charge of £600,000 on death.

Under the pre-Budget rules it would have been exempt from this charge as a result of APR and BPR, allowing the business to remain intact to continue operating with land management and food production passed to the next generation. This was true also for other eligible businesses.

This loss of relief seriously threatens the ability of operating businesses to survive generational transfer.

Basic Payment Scheme (BPS)

Among other consequences, Brexit resulted in the loss of BPS and a more or less straight line decline of £200/ha annual payments to support land management and food production across the UK.

In 2020, the UK farming sector as a whole received £3.5 billion in support for but payments have declined since 2021.

UK net farm incomes (profits) were also around £3.5bn in 2020 which demonstrates that without support there is no profit.

In another shock, the Chancellor has announced a cap on the delinked BPS payment in England of £7,200 per farming business for the 2025 year. No guidance or statement has been provided for the 2026 and 2027 years.

National Insurance Contributions (NIC)

Employers NIC will rise to 15% and the threshold has been reduced.

For a business employing a member of staff on an average annual wage of £30,000, we estimate that these changes will cost approximately an additional £900.

Pensions

For IHT purposes, pensions will now all fall into the deceased’s estate, another huge change for everyone with any significant pension fund, with a new expected exemption threshold of £500,000 by 2030.

There is a great deal to consider within this Budget. We are sure that further announcements and clarity will be provided, and we will continue to provide updates as and when these are made.