After months of leaks and pitch rolling, the 2025 Autumn Budget was almost over before it started. The Chancellor’s moment was spoiled by an early leak of the OBR’s economic and fiscal outlook, not that you’d have known it from the noise in the House of Commons.
For the agriculture sector the excitement started even earlier, with farmers descending on Westminster to peacefully protest against the Government’s Inheritance Tax (IHT) changes, announced last October. There were placards, tractors and arrests, but the new IHT rules remain (more on that below).
Thankfully, for the farming sector, the Budget itself was not the seismic event seen in 2024.
Jack Deal, Farms and Estates Partner, outlines his key take aways and the areas he’ll be raising with clients in the coming weeks.
Inheritance Tax (IHT)
The Government has stuck to its guns on its October 2024 IHT changes. Meaning that the £1m allowance for the 100% rate of Agricultural Relief and Business Property Relief is still planned to come into force in April 2026.
The full Budget report from today’s announcement though confirmed that any unused part of an individual’s £1m allowance will be transferrable between spouses and civil partners, including if the first death was before 6 April 2026. This is a sensible move that the industry has been asking for since October 2024.
Rumoured caps on lifetime gifting were not included this time around – good news for individuals that want to transfer assets out of their estates but didn’t manage to do so before the Budget.
Capital Gains Tax (CGT)
Commonly used reliefs such as business asset rollover relief and gift hold-over relief were untouched in the Budget. Again, this is good news for the many businesses looking to invest and conduct family succession planning.
Perhaps most significantly though, the base cost uplift on death survives, for now.
This has long been touted for reform and has taken on renewed significance for landowners, particularly with succession challenges, since the October 2024 IHT changes were announced.
Property taxes
One announcement likely to affect the sector is the new ‘high value council tax surcharge’ (HVCTS), also known as the Mansion Tax, that owners of properties worth £2m or more will now face from April 2028.
Properties valued between £2m and £2.5m will face a charge of £2,500, with this charge rising to £7,500 for a property valued at £5m or more.
The Government will consult on the HVCTS in the new year, and we hope that consultation will consider reliefs for properties that are intrinsically tied to farming businesses.
Additionally, the two-percentage point tax rise on property income from April 2027 will be a further blow to estates holding property portfolios who are already dealing with increased regulatory and cost pressures.
Capital allowances
Writing Down Allowances (WDAs) which allow businesses to deduct capital costs from the profits they pay corporation tax on, will be reduced from 18% to 14% from April 2026.
Also announced was a new 40% First Year Allowance for main rate expenditure, to be introduced from 1 January 2026. This will be particularly useful for partnerships who do not qualify for the Annual Investment Allowance (AIA), as we understand they will qualify for the new 40% First Year Allowance.
The rate of the AIA remains unchanged at £1m and Full Expensing for companies was untouched in the Budget.
Tourism
Alongside the Budget it was announced that local Mayors will be given powers to charge new levies on overnight stays in their areas.
The Mayors of London and Greater Manchester have previously called for such levies, which operate in a number of major cities worldwide. However, based on what we know, the proposed measure could have far reaching effects on rural communities.
The proposed measure was announced by Steve Reed, Secretary for Housing, Communities and Local Government, who ironically was keen to stress the need for farming businesses to diversify during his time in charge of DEFRA. So those that have diversified into holiday accommodation will now be weighing up the impact of an additional cost to their customers on their businesses.
A twelve-week consultation on how the measure should work is available at Visitor levy in England – GOV.UK and will close on 18 February 2026.
Gambling
Having announced increases to online gambling and gaming duties, the Chancellor confirmed that these would not apply to in person betting or horse racing.
This is a move that suggests the Government has listened to concerns from within the racing industry and at least recognises the current state of this popular rural pastime.
Pensions
The Government plans to cap relief from national insurance contributions (NIC) on salary sacrifice into pension schemes from 2029. Those employers within the agriculture sector who offer salary sacrifice schemes to employees will need to calculate and plan for the increased cost of NICs resulting from this measure.
Speculated restrictions on the pensions tax free lump sum or on the tax relief for personal pension contributions were not announced in the Budget.
What’s next for the sector?
Overall, this Autumn Budget offered the agriculture sector a welcome period of relative stability after a turbulent year of tax speculation and policy shifts. While key IHT reforms remain on course, the absence of any further restrictions on gifting, pensions, and core CGT reliefs will come as a relief to many farming families planning for succession.
That said, new measures such as the high-value council tax surcharge and changes to capital allowances will require careful consideration, particularly for land-owning businesses and estates.
The sector now needs the Government to listen and provide clarity on what support farmers and landowners can expect, and the tax legislation within which they are expected to operate.
We’re here to help
In the coming weeks, we’ll be working closely with clients to model the impact of these changes, to make sure existing plans remain fit for purpose, and to identify opportunities created by the new reliefs and allowances.
As ever, early conversations and proactive advice will be essential to navigating the road ahead.
Get in touch with a member of the Scrutton Bland team by calling 0330 058 6559 or reaching out via the contact form.
