How the 2025 Autumn Budget Will Affect Agriculture and British Farming

The 2024 Autumn Budget caused real financial unease across British farming. The decision to cap Agricultural Property Relief (APR) at £1 million landed hard with farming families trying to pass the farm on without triggering an Inheritance Tax bill.

So, when the Chancellor delivered the 2025 Budget, many farmers were watching closely. Would support for farming in the UK improve? Would the APR cap be lifted?

The answer: some minor concessions, but overall, this Budget adds pressure, particularly for family members trying to secure a farm succession plan and future-proof the family business.

In this article, Hawsons Agriculture Partner Dan Wood breaks down what the 2025 Budget means for farmers, with practical steps you can take now.

APR still capped - but transferable between spouses

Despite calls from the farming community and the Rural Accountancy Group, the Chancellor confirmed that Agricultural Property Relief will remain capped at £1 million per person from April 2026.

Has Agricultural Property Relief changed in 2025?

Yes. While APR still provides 100% relief, the Chancellor did announce one key concession, the allowance is now transferable between married couples or civil partners. So, if one person dies without using their full allowance, the survivor can inherit the unused balance, giving some families up to £2 million of relief.

That’s helpful for smaller or mid-sized UK farms. But for those with land, buildings or assets above the cap, this creates real urgency to plan.

What to do now: Review land and asset ownership. A clear and timely farm succession plan could save your family from a major tax hit later.

Farming support frozen - despite rising costs

Government support for agriculture in the UK remains fixed at £2.4 billion. That might sound stable, but when you factor in sharp cost rises for fertiliser, energy, fuel and labour, it’s effectively a real terms cut.

For many British farming businesses, especially smaller mixed farms, this means doing more with less as they plan for retirement.

What to do now: Build new forecasts using realistic input costs. Revisit your cashflow and look at whether alternative income streams could help steady the ship.

Environmental schemes continue - but favour the well-resourced

Are Environmental Land Management (ELM) schemes still funded after the Budget?

Yes. The Budget confirms long-term funding of £2.7 billion per year between 2026 and 2029 for sustainable farming. That includes payments through Environmental Land Management (ELM) schemes for agricultural land, capital grants and conservation work.

This could be a valuable income stream for farms engaging in cover crops, peatland restoration, or similar activity, but as ever, there’s paperwork. These schemes can be complex and may favour farms with the time and capacity to stay on top of the admin.

What to do now: If you’re already part of a stewardship agreement or thinking about joining one, now’s the time to check what’s available and assess whether it suits your farm business.

Capital allowances remain - but timing matters

If you’re planning to invest in new machinery or upgrade equipment, there’s still time to benefit from potential tax relief. Capital allowances, including full expensing and the Annual Investment Allowance, continue to offer upfront tax relief on plant and machinery.

However, from April 2026, the main writing down allowance becomes less generous. The writing-down rate will drop from 18% to 14% per year, slowing down the benefit.

Is now a good time to invest in machinery or buildings?

It could be. For short-to-medium-term investments like kit upgrades or modernisation, the tax relief is still attractive where annual investment allowance applies. But if you’re considering larger investment, the reduced allowance from 2026 may reduce the overall return.

What to do now: Speak to your adviser. If you’re planning a large capital project, bringing it forward could save more in the long run.

Labour costs rise – again!

Alongside the National Minimum Wage increase, employer National Insurance costs are going up to and the earnings threshold is coming down.

For family farms and British farming businesses reliant on permanent or seasonal labour, this is another cost to factor into already tight margins.

What to do now: Update your wage forecasts for 2026. Start looking now at how seasonal labour costs may affect your profitability and whether there are efficiencies that can be made elsewhere.

What does the 2025 Budget mean for farmers?

Dan Wood, Agriculture Partner at Hawsons, commented:

“This Budget won’t bring much comfort to the average farm. Yes, the APR concession helps with succession, and the capital allowances will support some investment, but the rising costs are outpacing the support on offer.”

“If you’re serious about passing the farm on to the next generation without unnecessary tax or family conflict, now’s the time to review your structure. A good farm succession plan takes time and the earlier you start, the better the outcome.”

We work with farming families on anything from accounting and Inheritance Tax to investment timing and farm succession planning.

If you’d like to sense-check your plans or talk things through, we’re always happy to help. A short conversation now could give you clarity and peace of mind for years to come.

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