Autumn Budget: what it means for you

Following the announcements from the Chancellor's Autumn Budget, CLA experts provide an initial assessment of how updates will impact members and the wider rural economy.

Rumours of significant cuts to Defra budget have proved false with an overall increase of 2.7% in real terms growth, but the farming budget essentially remains static at £2.4bn for England in 2025/26.

Of this, there is an intention that that £1.8bn will be spent on Environmental Land Management (ELM) schemes, with the remainder on productivity schemes and final delinked payments. This fund also includes an additional £10m on top of the previously announced £50m allocation under the Farming Recovery Fund.

The good news is the commitment to ELM schemes – Sustainable Farming Incentive (SFI), Countryside Stewardship (CS) and Landscape Recovery. £400m in capital funding has been pledged over the next two years for tree planting and peatland restoration, and a small increase in funding to support flood defences and farm flood schemes. However, for next year there is a plan for accelerated cuts to the remaining delinked payments, which will affect larger landowners the greatest. The government says that the that money is needed to pay for SFI.

This accelerated reduction will impact on all businesses, with much lower delinked payments in 2025 being paid than could be expected or planned for in cash flow projections.

There will be no immediate change for CLA members. The commitment to the ELM schemes is welcome, but the cuts to direct payments next year will have an impact, particularly on larger businesses. The freeze in the agricultural budget will play out in how it is allocated across the different ELM schemes and productivity support. We expect more information on this in the coming weeks.

CLA President Victoria Vyvyan has already made the point to the farming minister that this would have a profoundly negative effect on investment, and we will continue to lobby on this.

The government has announced that it will reform inheritance tax reliefs (Agricultural Property Relief and Business Property Relief) from 6 April 2026. In addition to existing nil-rate bands and exemptions, the current 100% rates of relief will continue for the first £1m of combined agricultural and business property. The rate of relief will be 50%, with assets thereafter taxed at an effective rate of 20%.

We welcome the government’s confirmation that APR will be extended to land managed under an environmental agreement from 6 April 2025, something we had been pushing for over the last two years.

APR and BPR allow farmers and rural business owners to continue to produce food, maintain landscapes and rural communities, and help mitigate climate change in the context of long-term investment and low return on capital.  Maintaining a stable capital tax system is important to give farmers and rural businesses confidence to make long term commitments, particularly those needed to deliver for the environment over 20, 30, 40 or more years.

We have been warning government for months that curtailing APR and BPR would jeopardise the future of family farms up and down the country.  This will be a blow to family entrepreneurship in the UK. The inheritance tax reliefs are subject to strict criteria.

The CLA will continue to lobby hard for the protection of APR and BPR, and to ensure that the government is aware of the economic harm that restrictions would cause.

It is important to note that these changes will come into effect on 6 April 2026 and there will be a consultation in early 2025. The CLA will continue to make strong representations to the Treasury and the rest of the UK Government on behalf of members, including through the consultation. The CLA will be issuing more detail and providing guidance to members in the coming weeks.

Employers’ National Insurance Contributions (NICs) will increase by 1.2 percentage points, from 13.8% to 15%. The chancellor also announced that the Secondary Threshold, which is the point when employers start paying national insurance on an employee’s salary, will be cut from £9,100 to £5,000 a year.

However, the present employment allowance of £100,000 eligibility threshold will be removed, expanding the allowance to almost all employers. At the same time, the employment allowance has been increased from £5,000 to £10,500 per employee.

The increase in employers’ national insurance contributions had been widely anticipated. However, the impact of the additional NICs liability may be offset by the increased employment allowance for small and medium size employers.

The lower rate of capital gains tax is scheduled to increase from 10% to 18% with immediate effect (30 October 2024), and the higher rate from 20% to 24%. However, the rates of capital gains tax on residential property will remain at 18% and 24%.

Increased rates of capital gains tax will be detrimental to businesses, especially if they have to sell assets to stay afloat. This will have a disproportionate and unfair impact on capital held for the long term.

Long-term ownership should not be penalised as owners are also taxed on inflationary gains. More must be done to encourage investment in business assets, such as land and buildings, that are retained for long periods.

The Business Asset Disposal Relief (BADR) will remain in place. However, the BADR rate will rise to 14% from 6 April 2025 and will match the main lower rate of 18% from 6 April 2026.

BADR is normally used by business owners that are selling assets to retain funds for retirement. The increase in rate applicable to BADR effectively reduces the funds available for that purpose, particularly if they have been unable to invest during their working lives into private pension provision.

The government is increasing the Higher Rates for Additional Dwellings in Stamp Duty Land Tax on the purchases of second homes, buy-to-let residential properties, and companies purchasing residential property, from 3% to 5% from 31 October 2024.

Landlords looking to expand their private rented sector portfolio, for example, to support their expanding rural business to house employees, will have to pay a higher rate of Stamp Duty Land Tax on additional properties.

For example, a landlord owns two properties and is looking to purchase a third in order to house an additional worker for their business – if the property is worth £300,000, this will now cost them an extra £6,000.

The chancellor said that from 2026, the government will introduce two permanently lower tax rates for retail, hospitality and leisure properties. The government intends for it to be paid for by a higher multiplier for the most valuable properties - but without detail about how this will be defined.

She also announced a 40% relief on business rates for the retail, hospitality and leisure industry in 2025/26, up to a cap of £110,000. Alongside this, the small business tax multiplier will be frozen next year.

The current discount on retail, hospitality and leisure businesses will be reduced from 75% this year to 40%. The CLA welcomes the freezing of the small business multiplier, and the continued availability of a relief for the relevant businesses, which we know have been struggling with cost of living increases.

From April 2025, the National Living Wage will increase from £11.44 per hour to £12.21 per hour, representing an increase of 6.7%. This applies to those 21 and over.

At the same time, the National Minimum Wage that applies to those aged between 18 and 20 will go up from £8.60 to £10 per hour. The apprentice rate has increased from £6.40 per hour to £7.55 per hour. The rate for 16 and 17-year-olds has yet to be set.

For anyone running a business that employs staff, the increase in the national wage structure will lead to higher costs. In addition, it could have a negative impact on those rural employers seeking to employ apprentices in the future.

The government announced a freeze on fuel duty as well as extending the temporary 5p cut for one year.

The CLA welcomes this announcement, particularly at a time when rural businesses and communities are continuing to struggle with the cost of living. Any move to increase the fuel duty would have led to higher transport and supply chain costs and led to inflated food prices.

The government announced £3.4bn towards heat decarbonisation and household energy efficiency over the next three years. This includes £1.8bn to support fuel poverty schemes, helping more than 225,000 households reduce their energy bills by as much as £200. The government will increase funding for the Boiler Upgrade Scheme in England and Wales this year and next, following the high demand for the scheme. The government is also providing funding to grow the heat pump manufacturing supply chains in the UK.

The continuation and the increase in funding for the Boiler Upgrade Scheme will be welcome support for homeowners and landlords looking to install a heat pump or biomass boiler. The CLA called for a continuation of this scheme in its budget submission.

It was announced that there would be £46m to support the recruitment and training of an additional 300 planning officers. This was announced as part of Labour’s manifesto but had not been previously costed.

This will help resourcing problems within local authority planning teams; however, we need reassurance that rural authorities will receive some of this support and that the additional resource will not be absorbed by delivering new towns.

Wales is to receive an additional £1.7bn allocation for infrastructure spend on schools, health and transport for 2025-2026 under the Barnett formula for infrastructure.

This additional allocation is on top of the present £5.3bn allocation. While this additional capital spend is welcomed, it is important that rural communities see tangible benefits.

Stay tuned for further detailed analysis from CLA experts on the Budget.