Farmers and landowners are bracing for fresh financial pressure as the chancellor’s autumn budget approaches, with rural advisers warning that further tax changes could erode already-tight profit margins across farms and estates.
Carter Jonas says farm and estate owners should be prepared to make swift decisions about their business structures once the budget is announced, as uncertainty over key tax rules continues to unsettle the sector.
While inheritance tax reforms have dominated concern since last October, the property consultancy warns that several other fiscal levers could also hit confidence.
Tim Jones, head of rural at Carter Jonas, said clients are hoping for clarity and some degree of optimism, but remain wary of decisions that further weaken their financial resilience.
There is, he said, widespread anticipation over what Rachel Reeves will announce on agricultural property relief (APR) and business property relief (BPR), describing them as “two of the most critical tax tools for farm and estate owners”. Despite extensive lobbying, he noted there had been “no indications so far of any concessions fromgovernment”.
Raising the APR threshold from £1m to £5m would, Jones said, make a meaningful difference to family farms already under strain from policy upheaval, inflation and rising costs. “Such a move would go some way to supporting the viability and sustainability of family farms,” he explained.
Landowners will also be watching closely for any changes to gifting rules, which remain central to succession planning. Some families have delayed restructuring in the hope that lobbying on inheritance tax might influence Treasury decisions and may need to act quickly once the budget confirms the direction of travel.
Housing policy is expected to be another flashpoint. A proposed ‘mansion tax’ on homes valued over £1.5m — potentially levied annually — could inadvertently capture traditional farmhouses and estate residences, particularly in southern England.
These properties, Jones warned, are “usually family assets and integral to the running of a business”, meaning owners could be affected despite not being the target demographic for such a tax.
Operational costs will also be under scrutiny. Agriculture employs almost half a million people, and recent rises in national insurance contributions have already put pressure on employers. Any changes to the national minimum wage or apprenticeship funding will therefore be closely monitored.
With rural businesses forming the backbone of many local economies, even small increases in labour or tax costs can have a wider ripple effect across countryside communities.
“Ultimately, our clients will be hoping for a budget that does not further erode business profitability,” Jones said. “Confidence to invest and innovate depends on a stable and predictable fiscal environment.
"Many land-based businesses are already making tough choices about their future, and further uncertainty could constrain growth across the rural economy.”
Clarity on future funding for the Sustainable Farming Incentive would be welcomed, although it is not expected to feature in this month’s announcements.
For now, Jones said, businesses are operating in an environment where “long-term planning is extremely difficult”, and a consistent framework would go a long way to restoring confidence as the sector awaits next week’s budget.
