Farmers and retailers unite in £5m tax relief push for UK food production

Britain’s biggest supermarkets have joined forces with farmers to demand urgent tax reforms, warning that current rules are holding back billions of pounds of potential investment in domestic food production.

The National Farmers’ Union (NFU) and nine major retailers, including Tesco, Aldi, Asda and Sainsbury’s, are urging the chancellor to use the autumn budget to encourage agricultural investment and strengthen the UK's food security.

The intervention comes amid growing concerns over Britain's reliance on imported food, with NFU analysis revealing that domestic self-sufficiency has declined in 10 of 11 everyday food categories over the past three decades.

Agri-food import volumes have also risen by 70% during the same period, highlighting the challenges facing British food production.

In a joint letter, the organisations are calling for the Annual Investment Allowance (AIA) to be increased from £1 million to at least £5 million and extended to cover farm buildings and other essential infrastructure.

The allowance currently provides tax relief on qualifying business investments, while eligible farm buildings and structures generally fall under a separate scheme offering relief at 3% a year.

The proposed reforms would make it easier for farmers to invest in water storage reservoirs, polytunnels, poultry and livestock housing, and renewable energy facilities.

According to the NFU and retailers, existing tax arrangements are discouraging major projects that could improve productivity, support domestic food supplies and help farms withstand future economic and environmental pressures.

NFU President Tom Bradshaw said: “British farmers and growers want to invest in the future. They want to increase productivity, improve efficiency, reduce environmental impacts and strengthen domestic food production. But too often the tax system works against these investments rather than supporting them.”

Bradshaw argued that extending the allowance would demonstrate the government's commitment to economic growth and its recognition of food security as a national priority.

“This is about strengthening the foundations of our food system and building resilience in the sector for decades to come."

The British Retail Consortium (BRC) has also backed the proposals, stressing that investment in UK agriculture is essential to maintaining reliable domestic supply chains and affordable food for shoppers.

Jim Bligh, BRC Director of Corporate Affairs, said: “Investing in British food production is an investment in the nation’s food security.”

He added that helping farmers improve productivity and resilience would support economic growth and enable retailers to continue supplying high-quality British food at affordable prices.

The letter has been signed by Aldi UK, Asda, the Co-operative Group, Lidl GB, M&S Food, Morrisons, Sainsbury’s, Tesco and Waitrose.

The organisations have offered to work with the Treasury and Defra on the design and implementation of the proposed changes.

Their joint appeal increases pressure on the chancellor to address barriers to farm investment ahead of the budget, as the agricultural sector seeks greater support to safeguard Britain's long-term food supply.