Autumn Statement: How will it affect farmers?

Farm workers, partners, agricultural contractors and sole traders were all given a National Insurance cut following the Autumn Statement – but impact will be limited by frozen thresholds.

Chancellor Jeremy Hunt's headline announcement on Wednesday (22 November) was to reduce Class 1 employee’s National Insurance from 12% to 10%.

He also reduced Class 4 National Insurance for the self-employed from 9% to 8% and abolished self-employed Class 2 National Insurance.

There was an extension until 2024/25 of the current 75% relief on business rates up to £110,000 – which could impact farmers who have diversified into farm shops, cafes, or leisure facilities.

Alcohol duty was frozen until August 2024 - but there were none of the predicted changes to inheritance tax and the decision on how Agricultural Property Relief would be applied to Environmental Land Management schemes was deferred to spring.

Sean McCann, chartered financial planner at NFU Mutual, said: “The Chancellor mentioned the farmers who keep food on our plates when he announced cuts to self-employed national insurance, which he claims will save an average of £350 per year.

“While this is welcome, it’s important to remember that national insurance thresholds remain frozen until 2028, which will increase national insurance bills as earnings rise to keep pace with inflation.

“Employees will benefit from the change in January, while the self-employed won’t receive their cuts until April."

With the Chancellor’s statement focused on backing business growth, Mr McCann said it was surprising he didn’t go further and reduce employer’s national insurance too.

He said it was disappointing there was no further detail on how Agricultural Property Relief would be applied to land taken out of agricultural production under some Environmental Land Management schemes, with that announcement being deferred until spring.

“Farmers and landowners desperately need confirmation so they can plan accordingly for the future," Mr McCann said.

For farmers that have diversified into farm shops, cafes and leisure facilities, the extension of the current 75% relief on business rates of up to £110,000 for 2024-2025 is set to be welcomed.

Meanwhile, those producing beer, cider, wine, or spirits may be helped by the freeze on alcohol duty until 1 August 2024.

But NFU President Minette Batters said that while cuts to National Insurance contributions would benefit some farmers, the "majority look set to miss out on some of the headline measures".

“For instance, while we acknowledge the announcement of full expensing, most farm businesses are ineligible as the vast majority are unincorporated businesses.

"Similarly, while it’s positive to see streamlining of the planning system, especially on grid connections, again this appears limited to large scale projects."

She added: “Farm businesses form the bedrock of the UK’s largest manufacturing sector – food and drink. To make a real difference, the Chancellor’s focus must be on targeted investment incentives to stabilise, grow and decarbonise our sector.

"This is what the NFU has been calling for in our submissions to Treasury for many years and the time to act is now.”

And the president of the Country Land and Business Association (CLA), Victoria Vyvyan, said that from a tax perspective, it was an Autumn Statement that failed to recognise the potential of the rural economy.

“Rural businesses have suffered a very high tax burden at the same time as high costs," she said, "While some measures, such as cuts to self-employed national insurance, are welcome, they will not help businesses in the countryside to grow.

“The tax system needs to be simplified and designed to modernise the sector, driving productivity growth."