What can farmers do now to mitigate the 2025 Budget?
18th December 2025
Experts at this year’s Larking Gowen Autumn Farming Conference series in East Anglia noted that while the Budget was not as bad as expected, it was not a Budget for growth. Farmers Guide attended the Ipswich conference.
Changing up the format of its conferences this year, Larking Gowen ran a series of four morning autumn conferences in East Anglia – delayed until December to allow speakers to focus on the 2025 Autumn Budget.
Now in its fourth year, the conference attracted over 250 farmers, growers, landowners and agricultural/rural business owners.
Chancellor Rachel Reeves delivered her Budget a month later than previously this year, on 26th November.
Speakers noted that many of the measures it was feared the chancellor might impose did not go ahead, such as changes to capital gains tax, VAT thresholds and gifting of assets.
However, plans announced last year to reduce agricultural property relief were confirmed in the Budget, albeit with one tweak meaning the allowance is transferable between spouses.
Susan Twining, CLA’s chief land use policy advisor, said: “It would be fair to say at CLA London there was an awful lot of trepidation in the run up to [the Budget]; there were lots of rumours flying around. We felt relieved on the day that it wasn’t worse, but clearly it’s not a Budget for growth.”
Some good news included the 5p discount for small and standard multipliers for retail; and the two-year relief for businesses expanding into a second property. However, these discounts do not apply to those with a rateable value of over £500,000.
The 5p cut on fuel duty was also retained, and fully funded training for apprentices under 25 in SMEs is available.
However, less welcome news included:
- Increase in minimum wage next year
- From April 2029, the amount that is exempt from national insurance contributions will be capped at £2,000/year for employee contributions made via salary sacrifice
- New income tax rates for property and, with no ability to declare what income you want to use against your allowance, it’s likely that higher rates will apply to more people
- ‘Mansion tax’ – higher value council tax from 2028 for properties over £2m.
CLA is lobbying to ensure the mansion tax has a workable methodology for valuation, potential exclusions for farmhouses and heritage properties that are open to the public, and support for hardship cases – for those who are asset rich and cash poor.
Monitor cashflow
Cashflow projections will be particularly important going forward, commented Andrew Kitchen, a divisional partner at Brown & Co. Noting the challenging harvest this year, among other pressures on farmers, he advised looking at your finance costs and reducing these where possible.
It’s important to monitor cashflow on an ongoing basis and carry out detailed budgeting, as much can change in 12 months, he added.
Benchmarking your labour and machinery costs can help to control the controllable costs – the company’s worst in class pay three times more than the best in class, he added. With machinery and labour accounting for 60% of total fixed costs, it’s worthwhile identifying peaks and troughs in usage and considering whether some machinery could be hired rather than owned.
Anything from sharing one or two pieces of machinery with a neighbour, to opting for contractors, to a share farming agreement, can help with this, and there are opportunities to raise capital through machinery sales, Andrew said.
READ MORE: Family farm tax: industry reacts as Finance Bill clears second reading
READ MORE: Industry leaders respond to publication of Farming Profitability Review 2025
READ MORE: ‘Huge missed opportunity’ – Industry responds to Budget announcement
Land values
Looking at land values, Brown & Co land agent Matt Thompson noted that there is a premium on agricultural land in East Anglia currently, ranging from £8,000–15,000/acre, compared to the average of £9,900 for England.
A significant amount of land is coming onto the market in the area, due to farm productivity issues, low returns, restructuring and retirement. However, not all land put up for sale is necessarily being sold.
Pre-Budget 2024 land was being bought up with development money, for natural capital and BNG, and by those seeking tax benefits or who viewed agricultural land as a safe investment. Despite last year’s Budget the above is still largely unchanged, and companies, institutions and charities are also looking for larger parcels of land.
IHT and pensions
Gavin Wood, managing director of Becketts, noted that previously a combination of APR, business relief, EIS investments and AIM stocks were used as a tax efficient way of managing clients’ affairs.
But the government’s proposed changes mean APR, BR and EIS investments above £1m will now only have 50% relief, and this £1m limit applies to all three asset types together – not £1m each.
IHT allowances were frozen until 2031 in the Budget – the nil rate band has been frozen at £325,000 since 2009, though if it had increased in line with inflation, it would be over £500,000 today.
When it comes to mitigating IHT Gavin advised speaking to your professional advisors, and reviewing ownership structures on family companies and farm partnerships, looking to use everyone’s £1m limits.
It was announced in the previous Budget that unused pension funds will be brought into the scope of IHT from April 2027. Trusts are likely to become a key, go-to planning tool, despite being seen previously as overly complex, and often unnecessary for pensions as they are now, Gavin explained.
Mitigating pension reforms
Commenting on what can be done to mitigate these effects, Gavin said creative use of exemptions and allowances will be needed. Whilst at one time pensions would be the last thing you’d touch if you wanted to generate income and pass on wealth, this is no longer the case.
Ahead of 2027, he advised reviewing pension and beneficiary structures – if you have multiple pensions, potentially combine them into one, and if you have legacy plans from some of the older insurance companies, transfer them. Additionally, make sure your letter of wishes is up to date and include your spouse.
Regular gifts from income exemption are likely to become more common. Gavin advised balancing potential IHT savings against loss of income and control, and working out how much you can afford to give away to aid succession conversations.
Once this decision has been made, the money must be invested wisely, he added. As average annual growth is never linear, Becketts splits investments into three pots with increasing risk over time.
Insurance options include shareholder protection and family insurance solutions to help mitigate IHT liability on death.
Funding
Looking ahead to future funding available to farmers and landowners, it’s expected that the Sustainable Farming Incentive (SFI) will reopen, though it’s likely that less funding will be available than previously – and more will be revealed at the Oxford Farming Conference.
At least another year of productivity grants is also expected – e.g. FETF and Farming in Protected Landscapes.
It’s thought capital grants will be extended for 2026, but those interested in applying are advised to start preparing now as schemes tend to open and close very quickly.
Delinked payments in England have been capped at £600 for 2026.
Nature schemes, previously the Nature for Climate Fund which includes tree planting and peatland restoration, will also continue but might also fund other nature schemes as well. The Animal Health and Welfare Pathway will also continue.
Farmers and landowners were urged to engage with local initiative as this is where there will be opportunities for funding, as well as investing in digital tools, training and data management.
Larking Gowen hosted its 2025 conference in Fakenham, Norwich, Ipswich and Eye in early December, raising funds for You Are Not Alone (YANA), which works to help those in agriculture and other rural businesses who are affected by stress and depression.
Read more political news.
