Autumn Budget: How Can Farmers Come Out On Top?

Following the announcements from Chancellor Rachel Reeves’ Autumn Budget in October, the focus on farmers has left some in the sector worried about what the changes could mean for their livelihoods. Here, Andy Howard, chief executive and co-founder of the leading biodiversity solutions and offsetting provider CSX weighs in on how farmers can reap rewards from the changes.

“Ahead of the Autumn budget, there had been a lot of contention speculation on what would be included, but I don’t think anyone in the rural economy was expecting quite the targeting of SME farmer businesses that transpired. It may now be a higher priority for these businesses to assess opportunities for extending nature-based solutions such as Biodiversity Net Gain (BNG) within land management practices.

“One positive outcome is the extension of Agricultural Property Relief (APR) to include land managed under an environmental agreement, such as BNG. First proposed by the previous Conservative government, this will now come into effect from 6 April 2025. This gives confidence and surety to landowners that BNG is being treated as an agricultural practice for inheritance tax purposes.

“It does have to be said, however, that the changes to Agricultural Property Relief from April 2026 will probably lead to quite a significant assessment of how land ownership is structured as it passes from one generation to the next.

In summary, combined agricultural and business assets below £1 million will still benefit from 100% relief, but anything above will be reduced to 50.

“This will no doubt increase the Inheritance Tax (IHT) payable by a substantial number of landowners and mean rural enterprises need to review their succession plans to endure the increase.

“As BNG is a 30-year commitment, and under the CSX systems the landowner owns the rights to the BNG and the value of it. This gives the landowner options to retain value or take an income from the land as well as when managing the timing and price at which they trade the BNG units.

“IHT planning is likely to need reassessing for rural enterprises following this budget. Having a BNG project which retains the rights to control the value and sale of the tradeable units can form a supporting pillar of the succession and IHT planning for the landowner. 

“For example, this might include regular sales of BNG units to transfer value to a sinking fund pot to cover future payments or covering the borrowing costs if a loan is taken out to pay a resulting tax liability.  BNG units could be a resource suitable for raising revenue at a time necessary to pay an inheritance tax bill.  

“It's likely to take a period of time for the practical implications of this budget to be better explored and understood. BNG units could very well form part of a rural enterprise’s diversification and risk management strategy now, as well as being a source of income from undertaking environmentally friendly land management practices. 

“However, if and when it does become crucial, it is better to have your options explored and in front of you rather than in the ether. We encourage all landowners to get in touch to discover the real value of their land before they’re in a pinch position.”

To learn more about CSX and its offering, visit its website here: csxcarbon.com