Autumn Statement: What does it mean for farmers?

Farm workers, partners, agricultural contractors and sole traders were all given a National Insurance cut in Jeremy Hunt’s Autumn Statement today – but the impact will be limited by frozen thresholds, said NFU Mutual.

The Chancellor’s headline announcement was to reduce Class 1 employee’s National Insurance from 12% to 10%. He also reduced Class 4 National Insurance for the self-employed from 9% to 8% and abolished self-employed Class 2 National Insurance.

There was an extension until 2024/25 of the current 75% relief on business rates up to £110,000 – which could impact farmers who have diversified into farm shops, cafes, or leisure facilities.

Alcohol duty was frozen until August 2024 – but there were none of the predicted changes to inheritance tax and the decision on how Agricultural Property Relief would be applied to Environmental Land Management schemes was deferred to spring.

Sean McCann, chartered financial planner at NFU Mutual, said: “The Chancellor mentioned the farmers who keep food on our plates when he announced cuts to self-employed national insurance, which he claims will save an average of £350 per year.

“While this is welcome, it’s important to remember that national insurance thresholds remain frozen until 2028, which will increase national insurance bills as earnings rise to keep pace with inflation.

“Employees will benefit from the change in January, while the self-employed won’t receive their cuts until April.

“With the Chancellor’s statement focused on backing business growth it’s surprising he didn’t go further and reduce employers’ national insurance too.

“It was disappointing there was no further detail on how Agricultural Property Relief will be applied to land taken out of agricultural production under some Environmental Land Management schemes, with that announcement being deferred until spring.

“Farmers and landowners desperately need confirmation so they can plan accordingly for the future.”

Chris Walsh, farm specialist at NFU Mutual, added: “For farmers that have diversified into farm shops, cafes and leisure facilities, the extension of the current 75% relief on business rates of up to £110,000 for 2024-2025 will be welcome news.

“Meanwhile, those producing beer, cider, wine, or spirits may be helped by the freeze on alcohol duty until 1st August 2024.”

“Disappointing fiscal statement”

The Farmers’ Union of Wales said it was disappointed that the recent drop in inflation rates has not fed through to lower interest rates. And a warning from the Bank of England suggests we should not expect many changes in the near future.

FUW group chief executive Guto Bebb said: “Whilst we fully understand the need to get inflation under control this should not be at the expense of farmers being able to recoup the cost of production. There is a lot of recent evidence that the fall in the price of dairy products is having a very real and detrimental impact upon farm gate prices.

“This is a rather disappointing fiscal statement from the UK Government which does little to resolve the cost-of-living crisis and not much to instil confidence in the business community.”

The union said the statement was a missed opportunity to give the sector a much-needed confidence boost.