“It’s a smokescreen”: Farmers’ reactions to the Budget

The chancellor’s recent Budget sent shockwaves through the industry – largely due to inheritance tax, but there were also a number of other unwelcome announcements.

The government’s decision to cap agricultural property relief (APR) on inheritance tax (IHT) at £1m (after which 50% relief applies) has prompted outrage from the industry. 

An increase in minimum wage and employer national insurance will also put pressure on many businesses. 

The Budget has dealt a serious blow to farmers’ confidence, at a time when it was already known to be low – with some saying they are rowing back on plans to invest in their businesses.

It has also highlighted the widespread lack of understanding that farmers are asset rich but cash poor.

Some, however, have said that making succession plans earlier could be a benefit. 

Just Farmers recently compiled a range of responses to the Budget…

Local impacts

Somerset beef farmer John Ker believes the changes to IHT could actually bring a local benefit, giving farms the chance to expand. 

He guesses that around 70% of the land within a few miles of his farm is owned by those who do not work the land or live locally full time.

All land sales in the past 10-15 years have gone to wealthy individuals from London or other countries, John reckons.

“These latest tax changes might reduce or change those purchasing behaviours and perhaps give some of the local farms a chance to expand,” he added.

READ MORE: Chancellor announces “hammer blow” reforms to agricultural property relief 

READ MORE: Cross-party MPs slam “betrayal” of farmers in Budget

However, Wiltshire farmer Peter Gantlett blasted the move as “inept” as most families will be able to plan to avoid the tax – though it will take time and money that could have been spent on reinvesting.

“[…] It will be families who have to contend with a sudden family loss that will also have to contend with a sudden tax bill,” he added.

“It’s arbitrary and it’s cruel, and it’s all because of some perverted ideology.”

Bringing forward succession plans

Some farmers have pointed out that the reduction of APR will force businesses to make succession plans earlier – potentially benefitting the younger generations. 

Tim Dobson, formerly dairy and now a goat farmer, commented: 

“More honest and open discussions mean that fewer families will live their lives in the hope that one day this will all be yours and then find that what they were told and what the will says are two different things.”

However, as poultry and arable farmer Will Oliver says, early succession planning may not be enough to protect farming families from the tax. 

“The risk is what happens in a shock situation – like cancer, or a car crash. 

“Even if Dad passed the farm to me, those things could still happen to me and would leave my wife and children in a right situation where we could be forced to sell our home.”

Warwickshire sheep farmer Bizza Walters also noted that the news could a “huge blow” for many family farms who haven’t yet planned for the future.

Rory Lay, who runs a beef, sheep and arable farm in Shropshire, falls within the £1m allowance for APR, but the majority of his father’s farm would need to be sold to cover the tax.

He said: “My main reflection from it all is: ‘Don’t die soon!’ It should encourage more people to plan more or accept it will be sold to pay tax. 

“It is all possible to plan around the new tax rules to continue to keep land within a family if everyone is willing.”

READ MORE: “Stealth tax” on pickup trucks buried in Autumn Budget

READ MORE: ‘Please don’t despair’ – Jeremy Clarkson issues message to farmers on Ag Budget 

Tenant dairy farmer Rachel Risdon said more time is needed to ensure families can plan for the tax.

“Overall, I actually hope that it will make people think about passing farms over earlier in their lives, but it could really catch some families out very badly in the short term. 

“The lead-in time would need to be at least 10 years in order to be fair.”

Essex grower Pete Thompson’s parents put their £7 million farm into a limited company, ensuring that a stake, then a majority, then all shares were passed to his generation. 

As a result he is 99% sure there is no imminent liability from the tax.

Reluctance to invest 

Norfolk farmer William Barber said when the Budget was announced he was about to start work on building two more chicken sheds, costing circa £1.3m but is now having second thoughts.

“Why spend that sort of money which could possibly lead to my family being landed with a bill for an extra quarter of a million pounds?” he asked.

William added: “It does seem there is little point in investing in the future, starting a business, employing people or saving up a decent pension.”

He will be looking to lose staff and probably reduce investment.

Similarly, pig farmer Patrick Twigger was also planning to put up another building to develop another income stream “but at the moment there is no point as it would only make a larger tax bill. 

Wage and NI increases

It’s not just the IHT changes that are causing concern – many businesses will impacted by the increase in the minimum wage and national insurance.

Dairy farmer Ruth Grice, from Leicestershire, said the Budget was a “smack in the face” and does not look after working people:

“I work seven days a week, both on and off farm. As do countless others in the farming community. […]

“The increase in national insurance contributions and the minimum wage will have direct negative impacts on our small family business.”

Mark Bowyer has a smallholding and horticulture business in Surrey, living on rented land, so is not directly impacted by the changes to IHT – but said the national insurance hike “hurts”.

According to his initial estimates this will increase the cost of labour by 10% – already a big part of his costs.

To cover this, farm gate prices would need to increase by 6% just to maintain current levels of profitability. 

Rees Keene, grower and farm shop owner, meanwhile, expects to see a £100K uplift in wages across his two businesses. 

“We’re planning another double trench of price rises in the farm shop as we did last year,” he commented. 

However, as price makers and not takers, they have more freedom, which many other farmers don’t have, he acknowledged.

Farmers aren’t millionaires 

Meanwhile on social media, farmers have been sharing video responses on the impacts to their businesses – and trying to tackle misunderstandings about farming. 

Cammy Wilson, also known as The Sheep Game online, commented: “One rhetoric that I see online and in phone ins to the radio etc is talking about farmers like they’re millionaires.”

Using Jeremy Clarkson as an example he estimated his farm is worth £5m at the lower end – but as the former Top Gear host has demonstrated on Clarkson’s Farm, he doesn’t make any money. 

And on the occasions where farmers are making money, it’s often from diversified businesses, not food production, he pointed out. 

“If I was to go out and buy a £5m business I’d be looking at profit and loss sheets and wondering where’s my return on investment on this,” Cammy said.

“If you spend £5m on a business you’d expect to make a lot of money.” 

With farming, however, “it’s emotional, it’s generational”. 

He added: “If we start hitting folk with inheritance tax and they can’t leave it for the next generation, or they don’t see how it’s possible to leave it for the next generation, and they stop pushing on and just surviving as most of us are, who’s going to produce the food?”

READ MORE: Petition to stop inheritance tax changes reaches over 125k signatures in two days 

A “smokescreen”

Ally Hunter Blair urged farmers on X not to believe everything they read on the internet, and to go and seek advice from professionals such as accountants, solicitors or farm advisors.

Additionally, while acknowledging that the news on agricultural property relief is “huge”, he believes it is a “smokescreen” for a number of other measures in the Budget.

Such measures include the accelerated reduction in direct payments, carbon tax on imported fertilisers, double cab pick up tax and rise in employer national insurance. 

“There is so much other anti-farming, anti-small business stuff that has been hidden in this Budget. That means APR was just a beautiful smoke bomb to make everybody very cross but there’s also a lot of other underhand stuff in here. That is what I am more worried about.”

As a tenant farmer Ally acknowledged he “doesn’t have a particularly big horse in the APR race” but added “it’s a bad policy and it needs reviewing”. 

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