AN announcement made at the spring budget on Wednesday is 'welcome news' to farmers and landowners, says the Country Land and Business Association (CLA). 

The government has announced an extension to scope of Agricultural Property Relief (APR), meaning it now includes all environmental land management schemes, covering the Sustainable Farming Incentive (SFI), Countryside Stewardship (and other stewardship schemes) and Landscape Recovery, as well as the England Woodland Creation Offer.

It will also extend to similar schemes from April 6 2025.

CLA president, Victoria Vyvyan, said: “The CLA is pleased the government has listened to our calls for agricultural property relief to be extended. This is welcome news and will help farm businesses deliver environmental benefits as well as food production."

Sean McCann, chartered financial planner at NFU Mutual, echoes Victoria's response. 

“There was good news for farmers and landowners with the announcement that Agricultural Property Relief would be extended from April 2025 to include land managed under environmental schemes," he said.

“There had been concerns that land owners would be discouraged from participating in ELM schemes that involved taking their land out of agricultural production for fear of leaving their family with a large inheritance tax bill.”  

Jason Beedell, rural research director for Strutt & Parker, agreed. 

“This is good news and is something that Strutt & Parker, working with the Energy & Climate Intelligence Unit (ECIU) think tank, submitted evidence to support last year," he said.

"It is a move which should give farmers and landowners clarity and confidence that they can enter into long-term habitat creation, nature recovery, climate mitigation and flood management schemes without being unfairly penalised. It will give them greater flexibility to do more for the environment – in line with the Government’s own targets – at the same time as accessing new sources of revenue."

Jeremy Moody, secretary and adviser to the Central Association of Agricultural Valuers (CAAV), added: “Almost cost-free, given farmland’s eligibility for APR, this will remove inheritance tax (IHT) as an issue for farmers and landowners looking at environmental commitments. These options can now be considered on business and personal reasons, not pre-empted by fear of IHT and its 40% rate.

“It also answers a landlord’s concern about tax status if a tenant enters such an agreement, and gives environmental bodies a positive interest in APR.”

However, the Chancellor also anounced that he was abolishing the favourable tax treatment of furnished holiday lets.

Rural insurer NFU Mutual has noted that this will impact farmers who have diversified into holiday accommodation.

Sean said: “One of the Chancellor’s biggest announcements in the budget was to abolish the favourable tax treatment of furnished holiday lets from April 2025.

“This will detrimentally impact farmers who have diversified and now offer holiday accommodation on their farm.

“As well as the ability to offset full mortgage interest against income, there are also reliefs for Capital Gains Tax, and the ability to base pension contributions on the profits made running holiday lets, which made them more appealing from a tax perspective renting to a long-term tenant.” 

Victoria, president of the CLA, said abolishing the tax relief shows a 'disregard for small rural businesses'. 

"Rather than helping the tourism sector by permanently reducing VAT to make rates internationally competitive, the Chancellor is squeezing holiday let owners and stifling businesses that create jobs and support the rural economy," she said.

“By converting unused or underutilised properties, that may not be suitable as homes in the private rented sector, into high-quality holiday accommodations, property owners contribute to the local community's economic vitality. Targeting them will not help solve the housing crisis.

“The current tax rules for Furnished Holiday Lets provide a crucial support mechanism, strengthening the resilience and viability of many farms and rural businesses that in turn enables them to invest in their work looking after the environment and feeding the nation. Abolishing the tax relief shows a disregard for small rural businesses that often have narrow margins and face a constant need to reinvest.”

Elsewhere, Jeremy Hunt cut National Insurance contributions by 2% for employees and the self-employed, reformed Child Benefit Tax, and announced he would introduce a British ISA for investors.