'Rachel Reeves wants to back small ventures but her Budget does just the opposite'

The two per cent increase in Income Tax on rents and other property income from April 2027 directly impacts farms and estates that have diversified. Diversification has been encouraged for over a decade as the responsible, necessary path for modern farming. It is now being penalised. With personal tax and National Insurance thresholds frozen until 2028/29, this amounts to a stealth tax on the rural economy.

The tempering of changes to agricultural and business property relief by making the £1m full relief band transferrable between spouses and civil partners is to be welcomed. The surviving spouse will be able to benefit from that relief.

However, the £1m will now not be indexed until at least 2031 with the Nil Rate Bands again frozen until then. The £325,000 Nil Rate Band will then have been frozen for 22 years, and its 2009 value has already been eroded by inflation to just over £200,000. In practice it means a frozen threshold increasing exposure for family farms with rising land values. This is a backward step.

The Budget is accelerating tax collection and increasing red tape with mandatory electronic-format VAT invoices from 2029, more Self-Assessment liabilities collected via PAYE during the year and making Tax Digital penalties applying from 2027. The Chancellor speaks about “backing small businesses”. This Budget does the opposite.

The Budget’s major reductions in capital allowances add another disincentive to invest in modernising the UK’s Farm Infrastructure.

The National Living Wage increase to £12.71 from April adds yet more cost pressure to labour-intensive enterprises. The proposed visitor levy risks undermining rural tourism, the backbone of many local economies. Again, additional cost without additional support.

For all the talk of “modernising tax” and “driving growth”, the Government once again fails to address the question every farmer, estate owner, and rural service provider has been asking for two years: Where are the meaningful environmental schemes? Where is the long-term agricultural policy? Where is the certainty that will allow rural Britain to plan?

We are still waiting for certainty in every area that allows farmers and landowners to plan for the future, from a fully functioning ELMs successor and clear guidance on long-term natural capital markets to a coherent food strategy and a workable plan for the uplands.

DEFRA’s continued silence – and the Treasury’s apparent indifference – is now causing operational and financial paralysis across large parts of the rural economy. The countryside is being asked to absorb more cost, more tax, and more uncertainty while delivering food security, employment, environmental outcomes, public access, biodiversity uplift, and diversified business activity.

Yet the Government still fails to understand the real impact its policies are having on rural Britain. What the rural economy needs is not more stealth taxes or policymaking by press release but stability, long-term schemes, genuine engagement and a recognition that rural Britain is not an afterthought. It is a fundamental pillar of the national economy and landscape.

Until Government grasps that, Budgets like this will continue to miss the point entirely. And mark my words, further tax increases will come, from where is the question.”

Tim Sedgewick, Director, H&H Land & Estates