On Budget
“It is frustrating and disappointing, given the importance of today’s announcement to farmers and crofters, that the implications for Scotland’s agricultural budget are far from clear.
“Rather than delivering a ring-fenced, multi-annual budget from Defra’s pot, it appears that Scotland’s share of the agricultural budget has been baselined against last year and will now be included in the Scottish block grant. Going forward, it appears that the agricultural funding package may have the Barnett formula applied to it, and we are seeking urgent clarification on that.
“Scotland’s overall budget, as announced by the Chancellor, has seen the block grant increased by £3.4 billion. Scottish Ministers are on record that they wish Scotland’s farmers and crofters to avoid facing a cliff edge. As we move towards the Scottish Government budget on 4 December, it is now inherent that the ball on delivering an increased, ring-fenced multi-annual budget and supporting Scotland’s farmers and crofters to deliver for food production, rural communities, biodiversity and climate is in its hands.
On APR
If commenting on the announcement that from April 2026, the first £1m of combined business and agricultural assets will continue to attract no inheritance tax at all, but for assets over £1m, inheritance tax will apply with 50% relief, at an effective rate of 20%, please consider the following:
“The devil will be in the detail, but it was made crystal clear to the Chancellor by all UK farming unions the significant impact that any changes around taxation will have of our farming sector. She has chosen to ignore that advice.
“Changes to Inheritance Tax and Agricultural Property Relief will affect the liquidity on succession for farms above the £1 million threshold set, hitting many family farms, regardless of sized or type. Decisions to reinvest in these farming businesses will be shelved and the knock-on ramifications for the wider rural economy, and businesses up and downstream will be significant.
“This decision will generate only marginal benefits in filling a financial black hole but causes huge difficulties for some and will act as a barrier to those who wish to get a start in farming. The partial removal of APR and the threat of a considerable tax burden will see larger units being broken up and a major contraction of farmland being made available for tenancies or contracts.” Ends