A leading UK tax expert warns that the UK’s Autumn Budget spells a pronounced problem for the nation’s farmers, who will now be confronted with higher labour costs and steeper rates of inheritance tax.
Duncan & Toplis, which represents over 13,000 businesses across the Midlands and London, cautions that changes to Inheritance Tax will hit farmers hard – with the sector losing the exemptions it previously enjoyed under new rules.
Director and head of tax at Duncan & Toplis, Graeme Hills said: “The Autumn Budget isn’t disastrous, but let’s be frank – it isn’t good news.
“Changes to inheritance tax for agricultural land carry significant implications. With tax relief on farmland now capped at 50% for assets over £1 million, I anticipate a sharp shift in how farmers transfer assets to future generations.
“This could prompt the farming community to transfer land earlier to avoid Inheritance Tax burdens, but that can add an initial financial complication.
“It’s essentially an impending tax hike which may catalyse change long-term – but is likely to mean difficult decisions lie on the horizon for many of the nation’s farmers, so now is the time to act.”
National insurance and minimum wage hikes
“With the National Minimum Wage increasing to over £23,000 annually, employers’ National Insurance contributions increase to 15%, while the secondary threshold for employer NI is almost halved to £5,000, farmers will also face an enormous administrative challenge,” Hills continued.
“Essentially, the nation’s biggest line of expenditure has just increased – and it will inevitably mean that some businesses must think hard about how many employees they can afford.”
The changes, including a National Insurance increase to 15% for employers and a 6.7% rise in the National Minimum Wage to £12.21, will require “radical financial reassessment.”
Capital Gains Tax has now risen to 24%, which could dampen investment and slow asset disposal.
However, Hills noted that this rate “remains the lowest in the G7, maintaining some appeal for UK-based investments. While it’s a relief that it hasn’t been increased to the rumoured 45%, it is still an unwelcome adjustment for many businesses”.
