‘Shafted’ farmers dismayed by budget tax hikes warn of price increases

Chancellor Rachel Reeves’ budget has been described as “a blow to British farmers” by the NFU, which warned the government’s announcement of major tax hikes would likely lead to food price rises.

Reeves’ first budget and its £40bn in tax rises, which includes a £25bn increase in employers’ National Insurance contributions, has dismayed the wider business community and was bad for farm confidence, said NFU president Tom Bradshaw.

While she also pledged to slightly increase the agricultural budget for England from £2.4bn a year to £2.6bn (to reflect an underspend from the previous government) and increased and widened the government’s Farm Recovery Fund (for those hit by devastating rainfall earlier this year) to £60m, the overall response was dismay.

Her “shameless” decision to make changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) and their impact on inheritance tax (IHT), “despite repeated assurances from ministers that this wouldn’t happen”, meant “the futures of many family farms and the people who farm them at risk”, Bradshaw warned.

Under the chancellor’s proposals, the government will slash APR and BPR on farms worth more than £1m from April 2026 by 50%.

This meant businesses would pay an effective IHT rate of 20% on assets above the £1m mark – to the consternation of the likes of Jeremy Clarkson, who said farmers had been “shafted” and TV presenter Kirsty Alsopp, who said Reeves had “f**cked all farmers”.

The move was slammed as a “betrayal” by the Country Land and Business Association, with president Victoria Vyvyan saying the changes could “harm 70,000 UK farms, damaging family businesses and destabilising food security”, making the succesful passing of family farm businesses down through the generations much harder.

More on the budget:

• The budget as it happened and what it means for fmcg

• Labour’s budget gamble leaves businesses scrambling for cash

• The budget proves food manufacturing has no government backing

• Alcohol industry rages with duty set to go up in line with inflation

• Convenience stores to bear £666m in extra costs from today’s budget

• Your reactions to the new government’s £40bn tax-raising budget

Many farmers, already operating on slim margins, “will now face having to sell land to pay inheritance taxes”, she added. “At a time of profound change in the industry, adjusting to new agricultural policies, the government is offering no vision for a positive economic future for us in the rural community. We will continue to argue the case for these vital reliefs.”

Farmers were also “reeling” from the announcement of a speeding up of the phasing out of Common Agriculture Policy-based support schemes.

The NFU noted the fastest reductions in subsidies would be for those who received more than £100,000 in direct payments in 2020 and would receive no more than £8,000 in 2025 – which amounted to a significant cut to farm incomes, “at a time when their replacement schemes still leave many farm businesses locked out”.

Together with rises in the minimum wage and added costs to businesses that apply across the economy, “these policies raise serious questions about the future of British food security and the impact on food supply and prices” it added.

The budget would ultimately “add to the cost of producing food at a time when hard-pressed British farmers cannot absorb it, meaning either the supply chain or consumers will end up bearing the brunt”, the NFU said.

And the impact on British family farms which, already stretched to breaking point after a decade of tightening margins, cost inflation and extreme weather events, “could be the final straw for many”.

“This budget not only threatens family farms but will also make producing food more expensive,” said Tom Bradshaw.

“This means more cost for farmers who simply cannot absorb it, and it will have to be borne by someone. Farmers are down to the bone and gristle, who is going to carry these costs?”

It was clear the government does not understand that “family farms are not only small farms, and that just because a farm is a valuable asset it doesn’t mean those who work it are wealthy”, he added.

“Let’s not sugar-coat this, every penny the chancellor saves from this will come directly from the next generation having to break-up their family farm. This is one of a number of measures in the Budget which make it harder for farmers to stay in business and significantly increase the cost of producing food.”