Tim Sedgewick of H&H Group, says the Government has delivered another Budget full of tax and empty of vision.
“The recent Budget arrives at a time when agriculture, rural businesses, and land-based industries are in a period of unprecedented change. Yet again, it offers plenty of tax adjustments, new compliance burdens, and political positioning, but very little in the way of meaningful support or clarity.
For those of us working daily with farmers, landowners, estates, and rural enterprises, the message from Government continues to be deeply frustrating: no strategy, no stability, and no acknowledgement of the impact their policies are having on the countryside and the rural economy.
The Chancellor confirmed a 2% increase in Income Tax on rents and other property income from April 2027, raising rates to 22%, 42% and 47%. This directly impacts farms and estates that have diversified, not into speculative assets, but into the kind of rental arrangements that underpin real rural resilience. Diversification has been encouraged for over a decade as the responsible, necessary path for modern farming. It is now being penalised. With personal tax and NIC thresholds frozen yet again until 2028/29, this amounts to a stealth tax on the rural economy, dragging more ordinary working families into higher tax brackets, largely due to inflation rather than increased earnings.
For agriculture and family businesses, we welcome the tempering of the coming changes to APR and BPR by making the £1m full relief band transferrable between spouses and civil partners. The surviving spouse will be able to benefit from that relief so far as the deceased spouse did not claim on APR or BPR. Moreover and as with the Nil Rate Bands, we are told that widows and widowers will be able to benefit where the death is before April 2026, indeed has already happened.
However, the £1m will now not be indexed until at least 2031 with the Nil Rate Bands again frozen until then. The £325,000 Nil Rate Band will then have been frozen for 22 years and its 2009 value has already been eroded by inflation to just over £200,000. In practice it means a frozen threshold during high inflation, increasing exposure for family farms with rising land values, more complexity in structuring ownership and succession, and a wider net for HMRC scrutiny. At a time when farmers face higher costs, lower margins, market volatility, and environmental delivery obligations, this is a backward step.
The Budget is accelerating tax collection and increasing red tape with mandatory electronic-format VAT invoices from 2029, more Self-Assessment liabilities collected via PAYE during the year and making Tax Digital penalties applying from 2027. For many rural businesses, which are often traditional, time-poor and reliant on seasonal staff, this represents more cost and more compliance risk at a time when margins are already tight. The Chancellor speaks often about “backing small businesses”. This Budget does the opposite.
The Budget’s major reductions in capital allowances add another disincentive to invest in modernising the UK’s Farm Infrastructure. At a time when UK agricultural businesses are expected to meet higher environmental, welfare and technological standards, the Budget takes away tools that help them get there.
The Budget announces further “planning reform”, and vague promises to “accelerate delivery”, but with the UK’s housing crisis worsening no meaningful measures have been introduced to unlock stalled land, increase planning capacity at scale, or give developers and landowners confidence. For landowners engaged in strategic land promotion or sites tied up in option and promotion agreements, this Budget brings more uncertainty, not less.
The National Living Wage increase to £12.71 from April adds yet more cost pressure to labour-intensive enterprises. The proposed visitor levy risks undermining rural tourism, the backbone of many local economies. Again, additional cost without additional support.
For all the talk of “modernising tax” and “driving growth”, the Government once again fails to address the question every farmer, estate owner, and rural service provider has been asking for two years: Where are the meaningful environmental schemes? Where is the long-term agricultural policy? Where is the certainty that will allow rural Britain to plan?
We are still waiting for certainty in every area that allows farmers and landowners to plan for the future, from a fully functioning ELMs successor and clear guidance on long-term natural capital markets to a coherent food strategy and a workable plan for the uplands.
DEFRA’s continued silence – and the Treasury’s apparent indifference – is now causing operational and financial paralysis across large parts of the rural economy. The countryside is being asked to absorb more cost, more tax, and more uncertainty while delivering food security, employment, environmental outcomes, public access, biodiversity uplift, and diversified business activity.
Yet the Government still fails to understand the real impact its policies are having on rural Britain. What the rural economy needs is not more stealth taxes or policymaking by press release but stability, long-term schemes, genuine engagement and a recognition that rural Britain is not an afterthought. It is a fundamental pillar of the national economy and landscape.
Until Government grasps that, Budgets like this will continue to miss the point entirely. And mark my words, further tax increases will come, from where is the question.”