The budget offers some relief on fuel costs, but concerns remain over farm taxation and rising production expenses
British farmers have been left feeling "abandoned" by the government after Chancellor John Healey failed to reverse controversial inheritance tax changes in his autumn budget, despite extending temporary fuel duty relief.
NFU president Tom Bradshaw accused ministers of missing a crucial opportunity to support struggling farm businesses, warning that the measures offered little relief from rising costs and a worsening cash flow crisis.
"Today was an opportunity for government to act on the warm words it made over the summer. It has failed to act and has left farmers feeling abandoned."
Delivering his first budget on Wednesday (28 October), Mr Healey confirmed that temporary reductions in fuel duty would continue until July 2027, but stopped short of announcing the inheritance tax and investment measures demanded by farming organisations.
The decision comes after months of campaigning by farming organisations, which have warned that the government's tax policies are undermining confidence and threatening the future of family farms.
Under inheritance tax reforms introduced on 6 April 2026, the first £2.5 million of combined qualifying agricultural and business property receives 100% relief, with 50% relief applying above that threshold.
Unused allowances can be transferred between spouses or civil partners, potentially allowing couples to pass on £5 million in qualifying agricultural and business assets with full relief, alongside existing inheritance tax allowances.
Although the government increased the threshold from the £1 million originally proposed, the NFU and other rural organisations have continued to demand a complete reversal.
Ministers have defended the reforms as a means of raising revenue for public services while protecting smaller estates, estimating that around 85% of estates claiming agricultural property relief will not pay additional inheritance tax in 2026-27.
However, Bradshaw warned that retaining the so-called 'family farm tax' would continue to discourage investment and weaken confidence in British agriculture.
Elsewhere, the chancellor confirmed that the temporary 3.7p-per-litre reduction in red diesel duty would be extended for a further six months until 1 July 2027.
The measure will provide continued relief for tractors, combines and other agricultural machinery, with rising fuel prices having placed significant pressure on farm production costs.
But while welcoming the extension, Bradshaw questioned how much difference it would make to businesses already struggling financially.
"While the extension to the red diesel relief is welcome, fuel prices today are 65% higher than a year ago, so will offer minimal relief to the cashflow crisis facing farming businesses. This feels like tinkering while Rome is burning."
The NFU had urged ministers to maintain the temporary reduction, arguing that drought, disease and rising input costs had already pushed many agricultural businesses into difficult financial circumstances.
NFU deputy president Paul Tompkins previously warned that agricultural machinery was essential to producing the nation's food, while higher fuel costs were placing further strain on farmers.
Investment was another major issue raised by farming organisations ahead of Wednesday's budget.
The NFU had called for the chancellor to increase the Annual Investment Allowance from £1 million to at least £5 million and extend its scope to agricultural buildings and infrastructure.
The union argued that greater tax relief would encourage investment in livestock housing, grain stores, reservoirs and other facilities needed to strengthen domestic food production.
However, the requested reforms were absent from the budget, prompting further criticism from the NFU.
Bradshaw said ministers had missed opportunities to support investment in essential infrastructure, improve farm cash flow and reverse inheritance tax changes affecting family businesses.
He warned that failing to address these pressures would leave longstanding barriers to domestic food production unresolved.
"Ignoring these actions means that the bottlenecks holding back domestic food production and the overall confidence of the sector have not been addressed."
The NFU had also proposed temporary interest-free Keep Britain Growing Loans to help businesses affected by drought, disease and difficult trading conditions maintain production into 2027.
No such scheme was announced as part of the budget.
Fertiliser costs remain another concern following the government's announcement on Monday (26 October) that tariffs would be removed from selected imports.
The changes are intended to reduce costs and improve supply options, but the NFU has questioned whether farmers will see meaningful savings.
Bradshaw previously warned that the reductions were "unlikely to make a meaningful difference to farm businesses or household food bills".
He argued that much of Britain's imported fertiliser was already entering tariff-free, meaning any potential benefit would depend on savings being passed through the supply chain.
The union has also raised concerns about the Carbon Border Adjustment Mechanism (CBAM), due to take effect in January 2027, warning that charges on certain fertiliser imports could add to production costs.
Meanwhile, separate inheritance tax changes affecting pensions remain on course to take effect from April 2027, creating further uncertainty for farming families.
Under previously announced reforms, most unused pension funds and pension death benefits will be included in inheritance tax calculations for deaths occurring from 6 April 2027.
Sean McCann, chartered financial planner at rural insurer NFU Mutual, warned that the budget had left those plans unchanged, particularly affecting families who hold agricultural land within self-invested personal pensions.
"There were no changes to the plans that will see pensions included in inheritance tax calculations from April, which will bring added complications for farming families, particularly those with self-invested pensions who hold land within them."
He explained that farmland held within a pension does not qualify for the same agricultural inheritance tax reliefs as qualifying land held outside a pension, potentially exposing some families to additional liabilities.
Mr McCann also warned that the changes could create a combination of inheritance tax on pensions, the loss of residence-related tax reliefs and additional income tax where the pension holder dies after the age of 75.
He urged families to review their arrangements before April, while cautioning against making major financial decisions without professional advice.
"Before deciding to make big changes, it’s important to take advice to ensure that in a rush to avoid the worst of April’s tax changes you don’t compromise your future financial security."
Beyond the individual tax measures, the NFU has raised wider concerns about the government's approach to food security and the financial pressures threatening domestic production.
Bradshaw pointed to the Office for Budget Responsibility's worsening food price inflation outlook, arguing that ministers had failed to recognise the connection between supporting British agriculture and keeping food affordable.
He said the government had missed an opportunity to deliver on its commitment that food security was a matter of national security, while failing to provide the financial breathing space promised ahead of the budget.
The NFU president also argued that the lack of action would affect confidence beyond the farm gate, including among food manufacturers, retailers and businesses throughout the supply chain.
For British agriculture, the budget has therefore delivered some certainty over fuel duty while leaving major concerns surrounding inheritance tax, pensions, investment and rising production costs unresolved.
Farming organisations have repeatedly warned that continuing financial pressures could force businesses to delay investment, scale back production or reconsider their future.
Concluding his response, Bradshaw said the government's promises to support domestic food production were increasingly at odds with the reality facing farmers.
"This was pitched as the ‘budget for the working people of Britain’. Farmers and growers will not be feeling this extends to them."
He added: "Today the phrase ‘food security is national security’ feels nothing but a hollow promise".