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Fears of Capital Gains Tax rise pushing UK farmers to exit industry, warns expert

by October 7, 2024
October 7, 2024
Fears of Capital Gains Tax rise pushing UK farmers to exit industry, warns expert

Up to 10% of UK farmers may abandon the industry this month as concerns over rising Capital Gains Tax and reduced subsidies mount ahead of the new government’s Autumn Budget, according to Mark Chatterton, Head of Agriculture at Duncan & Toplis accountancy and business advisers.

The looming financial pressures have left British agriculture at a critical crossroads, with many farmers contemplating selling their land or stepping back from active farming altogether.

Chatterton reports that a significant portion of his East Midlands client base is now considering drastic measures such as selling land, passing it on to the next generation, or contracting out to larger farming businesses. The sector, already grappling with poor harvests and shrinking financial support, is now facing the additional uncertainty of potential tax hikes.

“The future of British farming is at a critical crossroads,” Chatterton warns. “This Autumn’s Budget could deliver a devastating blow if Capital Gains Tax is hiked as expected. Farmers are already struggling after poor harvests and diminishing subsidies—another financial hit may push many out of the industry for good.”

Confidence within the agricultural sector is at an all-time low. According to DEFRA figures, nearly half of farmers fear for the future, and the National Farmers’ Union (NFU) reports that confidence is at its lowest level since records began. The Sustainable Farming Incentive, a key support program, is set to expire in three years, leaving many farmers without a clear financial safety net.

The fear of a significant rise in Capital Gains Tax, potentially up to 45%, and changes to Inheritance Tax could further drive farmers to exit the industry, particularly those without clear succession plans. High land prices have provided an opportunity for some farmers to sell, but the uncertainty surrounding the upcoming Budget has accelerated decisions to leave before potential tax changes reduce financial prospects further.

Chatterton emphasizes the need for immediate government intervention to protect the sector. “The new government has vocally affirmed the UK’s agricultural sector as a matter of the utmost national security—and I couldn’t agree more. I’d urge the government to apply firm and consistent support for the sector when it needs it most.”

With speculation growing that the Autumn Budget will include significant tax reforms, the future of the UK’s agricultural sector remains uncertain. Farmers hope the government will turn its promises of support into actionable plans with clear timelines and deliverables. Without decisive action, Chatterton warns, the consequences could be devastating for both farmers and consumers, threatening the stability of the nation’s food production.

As the agricultural industry braces for potential tax hikes and reduced financial support, the next few weeks will be crucial in determining whether the sector can survive or whether an exodus of farmers will leave a lasting impact on British farming.

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Fears of Capital Gains Tax rise pushing UK farmers to exit industry, warns expert

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