There was not much good news in the budget for farmers or, indeed, much about farming with just three mentions of agriculture in 166 pages. Most within the industry felt that not much “breathing space” had been offered to farmers!
The Good News
- From 26th November, import tariffs on fertilisers will be cut by 2% from 8.5% to 6.5% and tariffs on Kerosene heating oil will be cut by 4%. This is welcome but fertiliser prices will be impacted by the carbon tax from January 2027 (see below) and heating oil has doubled in price since February so a 4% cut is not going to have much impact!
- The 5p/litre cut to road fuel duty and the 3.7p/litre cut to red diesel duty originally due to end in December 2026 have been extended until July 2027.
- There is an increase in the small business rates relief threshold from £12,000 to £18,000, which may take some farm diversification enterprises out of having to pay business rates.
The Bad News
- There was no change to inheritance tax with Agricultural Property Relief (APR) and Business Property Relief (BPR) still capped at £2.5 million, with 50% relief above that threshold.
- The UK Carbon Border Adjustment Mechanism (CBAM) is planned to go ahead from 1st January 2027 but at a lower rate than originally feared. The levy will start at £1.45/tonne of CO2e applied to imports of carbon-intensive goods including fertilisers. This will result in an initial levy of around £3.77/t for standard ammonium nitrate. The figures are still only indicative and the final rates for the period from 1 January to 31 March 2027 will be published before the end of the year. Rates in 2027 are relatively low, but future increases in the charges are predicted putting domestic food producers at a competitive disadvantage against imported food.
- There will be a further 2% increase in the income tax rates applying to property and savings income from 6 April 2027 in addition to the 2% announced in 2025. In total, the tax will be 4% higher than the rate applying this year.
Other announcements
- The National Minimum Wage for workers over 21 years old will increase by 3.9% from £12.71 to £13.20/hour. For 18-to-20 year-olds, the increase is expected to also be 3.9% from £10.85/hour to around £11.27. The changes will apply from April 2027.
- Householders with property in Council Tax Bands A to D will get a £100 “household energy payment” this winter.
