Ploughing Forward: What the Autumn 2024 Budget Means for Farmers

It’s been a month since Rachel Reeves announced the Labour Party’s Autumn 2024 budget. Now that the dust has started to settle, we’re reflecting on what these changes mean for farmers across the UK and how the industry – and insurers like MS Amlin Insurance – are adapting.

As expected, October’s announcement included several significant changes that directly impact the farming sector. Below is a breakdown of five headline shifts from the Autumn 2024 budget that every farmer and insurer should be aware of.

Key Takeaways from the 2024 Budget Statement

1. The Baseline Agricultural Budget

While not technically a ‘shift,’ it’s important to highlight that the 2024 budget statement honors previous financial commitments, keeping next year’s agricultural budget steady at £2.4 billion.

This marks the sixth consecutive year of consistent investment. However, this budget does not account for the significant rise in operational costs. Farming inputs have risen by approximately 44% since 2019, leading to tighter profit margins. Although frozen fuel duty costs come as a welcome relief, volatile international markets, the implementation of a UK Carbon Border Adjustment Mechanism, and a review of the core agricultural budget mean the long-term outlook remains uncertain.

2. Inheritance Tax Reforms

One of the most headline-grabbing changes is the reform to inheritance tax, sparking widespread concern among farming communities. Starting from April 2026, farms valued at over £1 million will be subject to a 20% inheritance tax, significantly shifting away from the previous system, which allowed many farmers to pass on their land, property, and business assets tax-free if specific criteria were met.

Additionally, the abolition of tax relief on inherited pensions means any unspent pension funds will also be included in inheritance tax calculations, although this change won’t take effect until April 2027. For many farmers, who are often “asset rich but cash poor,” this change could lead to the sale of parts – or even all – of their business or land to meet tax obligations.

3. Capital Gains Tax Increases

The 2024 budget statement increases capital gains tax (CGT) rates. Lower rates will rise from 10% to 18%, and higher rates will increase from 20% to 24%. Farmers selling assets such as land, property, or equipment could face higher tax liabilities on their profits.

Fortunately, reliefs such as Agricultural Property Relief (APR), Business Property Relief (BPR), and Business Asset Disposal Relief may help mitigate the impact for qualifying businesses.

4. Changes to Minimum Wage and National Insurance

The National Living Wage will rise to £12.21 per hour, increasing labour costs for many farmers. Additionally, employer National Insurance (NI) contributions will rise from 13.8% to 15%, and the payment threshold will be reduced from £9,100 to £5,000.

To help offset these increases, the Employment Allowance — which allows eligible employers to reduce their NI liability — will rise from £5,000 to £10,500.

5. Shifting Subsidies

The Labour government plans to accelerate the phase-out of the Basic Payment Scheme (BPS), which provides direct payments to farmers. However, the £60 million Farming Recovery Fund, designed to support farmers impacted by Storm Henk, remains intact. The government will also continue to promote the Environmental Land Management Scheme (ELMS) to encourage sustainable farming practices.

While these subsidies aim to promote environmental stewardship, transitioning to new systems often requires significant upfront investments in equipment, technology, and training.

What the 2024 Budget Means for UK Farmers

Whichever way you look at it, the 2024 budget introduces significant changes for the UK farming community. Rising taxes, increased labor costs, and shifting subsidies all contribute to mounting financial pressures that tighten already narrow profit margins. The shift toward sustainable farming – though vital for the environment – requires investment in new practices, equipment, and technologies, which can be cost-prohibitive for many.

True to their entrepreneurial spirit, farmers are finding innovative ways to adapt. From growing niche crops and investing in renewable energy to exploring agritourism, these initiatives are helping generate new income streams and allowing farmers to navigate this challenging landscape.

An Insurance Provider That “Mooo-ves” With the Times

A changing business means evolving insurance needs. Whether you’re protecting new specialist vehicles or expanding your coverage to include farm tours, events, or other diversifications, every new venture comes with unique risks.

With over 100 years of collective experience, we understand the challenges – and opportunities – posed by the 2024 budget. Our team of expert underwriters offers tailored solutions, whether you’re insuring a single vehicle or an entire agricultural fleet.

We know farmers have got a lot of things of their plate. Worrying about insuring the correct agricultural motor insurance doesn’t have to be one of them!