The Autumn Budget 2026
As expected, the Budget points to mounting pressure on public finances, already constrained by manifesto pledges and plans laid down by the departed Rachel Reeves. The markets may welcome the Chancellor’s commitment to fiscal consolidation, however, as stated by Helen Miller, Director of the Institute for Fiscal Studies, “this Budget has a raft of fiddly measures but very little that will move the dial on growth”.
So, what does the Autumn Budget mean for the rural sector? Well, the only measures specifically for farming are as follows:
- Temporary suspension of tariffs on fertiliser and kerosene imports but the Carbon Border Adjustment Mechanism on fertilisers it still expected to start on 1st January 2027
- Temporary 3.7ppl cut in red diesel extended to July 2027
Unsurprisingly and justifiably so, the farming sector has reacted with disappoint, NFU President Tom Bradshaw commenting – “[the Budget] was an opportunity for government to act on the warm words it made over the summer. It has failed to act and has left farmers feeling abandoned.”
A brief summary of the other measures that will affect the rural land and property sector:
Rent Tax
The Chancellor has added a further two percentage points to tax on property income from April 2027, on top of the two points previously announced, heaping pressure on landlords that have seemingly now been under attack for successive governments.
Business Rates
For those that have diversified into retail, hospitality and leisure and/or those with tenants in these industries, a welcome increase in the small business rates relief threshold, providing all properties with a rateable value of £18,000 or less with 100% relief from business rates. The change will be effective from April 2027.
Employment Tax
Although there were no major employment tax announcements, the freezing of income tax and National Insurance contribution (NIC) thresholds will continue to put cost pressure on employers and employees. Employer NIC will stay at 15%, while income tax and NIC thresholds will remain frozen until April 2031, drawing more employees into higher tax bands through fiscal drag.
The National Minimum Wage (NMW) and National Living Wage (NLW) rates will rise by 3.9% for all age ranges from 1 April 2027, further increasing the cost of employment.
Capital Gains Tax
The capital gains tax outlook is mixed. The main rate remains unchanged—a welcome outcome for many, particularly business owners. However, from 6 April 2027, the Business Asset Disposal Relief (BADR) lifetime limit will halve to £500,000, reducing the maximum saving for higher and additional rate taxpayers from £60,000 to £30,000.
Inheritance Tax
Notably, the Chancellor made no mention of Agricultural or Business Property Relief. Farmers and family businesses therefore remain exposed to inheritance tax, despite Burnham’s comments that the issue would be revisited.
Mansion Tax
The “Mansion Tax” (High Value Council Tax Surcharge (HVCTS)) is to be legislated for in the coming Finance Bill, with some clarification in the Budget but no change to the bands meaning that for properties valued between £2.0m and £2.5m the surcharge will be £2,500, rising to a surcharge of £7,500 for properties valued at £5m+.
Residential Development Schemes
The two key announcements that will be welcomed by developers or those with sites identified for residential development:
Clarification on the previously announced support for first time buyers, known as the Your First Home scheme, which will help those with a 2.5% deposit by providing a 20% government-backed equity loan to purchase a new build home. for future application windows, do contact us to discuss further.
BNG is to be removed from the residential development of brownfield sites up to 1.5 hectares, timing to be advised.
If you would like to discuss any of these changes with a member of our team, please contact our Rural Professional Team today on 01892 832 325.