Recent Budget offers farmers greater flexibility when considering environmental schemes

It has been a tumultuous couple of years in the farming sector, with wholesale changes to the subsidy regime, commodity price shocks and uncertainty concerning export markets.

In this context, there was at least some good news in the recent Budget for farmers, in particular the announcement that land managed under environmental agreements will qualify for Agricultural Property Relief from April 2025. This will help remove some of the uncertainty for farm businesses that currently exists around tax planning and may boost take up of various schemes such as the Sustainable Farming Incentive, Countryside Stewardship and Landscape Recovery and the England Woodland Creation Offer.

The detail of the new arrangements is still being picked over but they do appear to address issues raised by the Country Landowners Association and other groups representing farming and wider rural businesses. Whilst application of the relief requires the land to be deemed agricultural land for at least two years prior to its management under a qualifying environmental scheme, it looks as though it will not be necessary to show that the land has been used for agricultural purposes or that it previously qualified for Agricultural Property Relief; this, at least, provides some much needed operational flexibility from a land management perspective.

In addition, the holding period that triggers eligibility for Agricultural Property Relief will not be reset by the inclusion of land into an environmental management scheme. Further flexibility has also been given at the end of any qualifying environmental scheme in that the Agricultural Property Relief continues to be available so long as the land continues to be managed in a way that is consistent with the original agreement.

As we have mentioned in previous columns, all these kinds of specific aspects need to be considered in a strategic way if the farming business is to make the most of the opportunities that might be available. That, in turn, means draw on the co-ordinated advice of land agent, accountant and solicitor at periodic intervals to ensure that personal, wider family and business objectives all align sensibly and that relevant parties are involved – a point sometimes overlooked accidentally or deliberately!

In our experience, the farm businesses and the farming families able to move forward the most effectively are those where a co-ordinated plan and good levels of communication are evident. Where such conditions do not exist, it is usually possible to build up to a better position but there is always the risk that there is dissent within the farming partnership or company as to future direction with all the delays, lost opportunity and even the costs of resolving disputes.

Returning to the context of the recent Budget announcements, we may well see further changes to the detail of the taxation and subsidy regime as it applies to farmers so, now more than ever, a review and succession of plans and potential opportunities makes sense.

This article also appeared in the Yorkshire Post Farming supplement.

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