Farmers and landowners face a pivotal year in 2026, with succession planning, business strategy and closer scrutiny of performance rising sharply up the agenda as tax reform, policy change and cost pressures converge, according to Strutt & Parker.
The land and property specialist has identified eight themes likely to shape the rural sector over the year ahead, warning that decisions taken now will be critical as businesses prepare for major changes, including planned inheritance tax reforms due to take effect from April 2026.
Kate Moisson, head of rural at Strutt & Parker, says the sector is under increasing pressure to adapt. “We are entering a pivotal period for the rural sector, with the current challenges underscoring the importance of both strategic planning and management excellence to keep farms and estates firmly on the front foot,” she says.
The past year has tested many rural businesses. Proposed changes to inheritance tax, erratic weather, volatile commodity markets, rising labour costs and ongoing policy shifts have combined to squeeze margins and increase uncertainty.
Despite this, Ms Moisson believes there are grounds for confidence. “There is cause for cautious optimism. Land – and what it can offer society – has never been more in demand, opening the door to potential new income streams,” she says. She adds that “opportunities for business growth and improvement are there for those who are willing to explore new approaches and act decisively”.
Succession planning is expected to move firmly into focus as the government presses ahead with IHT reform. With the implementation date now clear, Strutt & Parker says farms and estates should urgently revisit succession and tax strategies with professional advisers. Making full use of remaining reliefs and securing up-to-date, accurate valuations will be essential to inform those discussions.
Profitability is also expected to remain under sustained pressure. The loss of Basic Payments, extreme weather and weaker commodity prices have already had a significant impact. Arable incomes were hit hard by drought conditions during the spring and summer of 2025, while livestock producers have faced forage shortages and high straw costs.
Against this backdrop, the firm says businesses that concentrate on what they can control – from budgeting and benchmarking to performance monitoring and risk management – will be better placed to cope.
Lower margins and policy uncertainty are prompting more farmers and estate owners to take a step back and review their businesses as a whole. Strategic farm and estate reviews are increasingly being used to clarify long-term goals and test whether current enterprises remain fit for purpose. An external perspective can help challenge assumptions, unlock new ideas and accelerate restructuring aimed at improving efficiency or developing alternative income streams.
Regulatory change is also gathering pace, particularly for those with residential property portfolios. Let property remains a key income stream for many rural businesses. However, from 1 May 2026 the phased introduction of the Renters’ Rights Act will begin, converting Assured Shorthold Tenancies into periodic tenancies, abolishing Section 21 ‘no fault’ evictions and introducing new rent review processes.
Further pressure will follow, with a 2% rise in tax on property income from April 2027 and tighter minimum energy efficiency standards from 2030. While returns may be squeezed, Strutt & Parker suggests rural landlords with a long-term outlook could benefit if other landlords exit the market. This could lead to firmer rents and reduced void periods.
In contrast, the farmland market is expected to remain broadly stable despite increasing polarisation. Average values softened slightly in 2025, but prices remain high by historical standards, with around 60% of arable land in England still achieving more than £10,000 an acre. Caution is influencing decisions, but confidence in the long-term fundamentals remains. Although IHT changes may prompt some sales, a sharp rise in supply is not expected in the short term.
Support schemes are also set to shape planning decisions in 2026. The revised Sustainable Farming Incentive is expected to reopen in the first half of the year, with strong demand anticipated. Farmers are being encouraged to assess which options suit their systems and to model the financial impact in advance.
Alongside the SFI, a range of more targeted grants remains available. These include water company schemes supporting improvements to water quality, soil health and biodiversity, as well as a growing number of private sector natural capital funding opportunities.
Diversification is expected to accelerate as farms and estates look to spread risk and reduce reliance on agricultural returns alone. Renewables, tourism, leisure, commercial space, food enterprises and natural capital projects are all gaining momentum.
However, Strutt & Parker cautions that diversification must align with wider business strategy. Projects can demand significant capital, management time and specialist expertise. Increasingly, landowners are also prioritising schemes that deliver social value and benefits for local communities.
Tax administration will add another layer of complexity from April 2026, when Making Tax Digital for Income Tax comes into force for sole traders and landlords with qualifying income over £50,000. Instead of an annual return, affected businesses will be required to submit quarterly updates to HMRC, followed by an end-of-period declaration.
Taken together, Strutt & Parker says 2026 will favour rural businesses that act early, plan strategically and take a clear-eyed view of performance as major tax, policy and market changes begin to bite.
