Nov 25
4 min read
So, there we have it, the long-speculated November Budget.
The chancellor’s limelight was somewhat stolen by the OBR report being released early, however, most of what was to come had been highly speculated and leaked over the last few months, albeit with a few surprises.
So, between the shouting and the blaming of the previous government, what did the chancellor announce which will likely impact those in the agricultural industry?
Regarding the reforms to APR and BPR which have been the headlines of most publications in the agricultural industry for the past year, the chancellor spent only a few seconds to announce that the 100% £1m allowance will be transferrable between spouses and civil partners. A slight softening to the reforms but a blow to those lobbying for a greater change.
Themes emerged from the Chancellor’s announcements being that of Contribution, Fairness and Modernisation. As the Chancellor continued it was clear that the government’s interpretation of fairness may not be applicable to all, as she then highlighted last year’s changes to capital gains tax, inheritance tax and VAT on school fees as an example.
The chancellor stated that reforms were being made ‘to make sure the wealthiest pay their fair share’ announcing a separate tax rate for property income from April 2027. Those with property income within the basic rate will pay tax at rate of 22%, 42% at the higher rate and 47% at the additional rate.
Additionally, dividends at the ordinary rate and upper rate will be increased by 2% to 10.75% and 35.75%. The additional rate will remain unchanged at 39.35%.
From April 2027 savings income tax will increase by 2% on all bands. The national insurance and income tax thresholds continued to be frozen for another three years
With savings in mind, from 6 April 2027 the annual ISA cash limit will be reduced to £12,000, within the overall ISA limit of £20,000. Savers over the age of 65 will however continue to benefit and save up to £20,000 in a cash ISA each year.
Whilst many hoped for a budget which may ease constraints on businesses, there were a few unforeseen changes announced which brought little comfort.
The chancellor announced that under the salary sacrifice scheme the amount sacrificed without paying NIC would be capped to £2,000 per employee from 2029. Although this is likely to increase costs for all involved, as this will not be implemented until 2029 there is time to plan for these changes.
Sticking with employees, the national minimum wage will increase from 1 April 2026 by 4.1% to £12.72 per hour.
With a slightly confusing move regarding trading income, a new 40% first year allowance for main rate expenditure will be introduced from 1 April 2026 (for unincorporated businesses) whilst from April 2026, the main rate for writing down allowances will be reduced from 18% to 14% for both companies and unincorporated businesses.
Other announcements included the ‘mansion tax’ for properties valued over £2m levied on the owners of the property with a new annual charge of £2,500 (£7,500 pa > £5m) and the introduction of the electric vehicles excise duty based on a levy per mile.
Whilst the IHT position surrounding APR and BPR has not changed as hoped, the transferrable allowance will aid tax planning and gives greater security to couples who previously had no option of restructuring.
The budget has highlighted areas where greater scrutiny is now required for the day-to-day management of the finances. Those with property income should ensure that margin costs are correctly allocated within the accounts and tax planning should be undertaken to maximise ISA allowances.
How the new ‘mansion tax’ will be administered is yet to be understood, but those with significant residential properties should be aware that their property may come under scrutiny if close to the £2m threshold.
Overall, a disappointing budget for those looking for improvements to the IHT reform and for most a greater tax burden with very little personal benefit.
Black Acre Rural has extensive experience in advising farming families and rural landowners. Please do get in contact for assistance with your inheritance tax planning, succession planning or accountancy needs.
Robert Black