Navigating the 2024 Budget: Key insights for farmers in Kent

The 2024 Autumn Budget has brought several changes that could impact South East farmers. Brachers law firm share their latest insights to help you navigate these changes effectively.

Employment matters and workforce management

The budget brings changes that will affect employment costs and regulations. Notably, the minimum wage will rise by 6.7% to £12.21 an hour for workers aged 21 and over and by 16.3% to £10 an hour for those aged 18 – 20. This increase is significant for farmers who employ seasonal or full-time workers, as it will impact payroll expenses. Additionally, employer national insurance contributions will increase by 1.2 percentage points to 15% from April 2025, and the threshold at which an employer becomes liable to pay NICs on earnings will reduce from £9,100 to £5,000.

To manage these changes, we advise reviewing your current employment contracts and payroll systems to ensure you will be compliant when the new rates come into force. Many agricultural businesses are considering implementing more efficient workforce-management practices, to optimise productivity and reduce costs as well as accelerating their automation plans. An employment lawyer can assist you in navigating these changes, ensuring compliance while maintaining a motivated and productive workforce.

Businesses and farms

The budget also brought significant changes to the Inheritance tax regime. The Government announced that Business Property Relief (BPR) and Agricultural Property Relief (APR) at 100 percent will, from April 2026, be limited to the first £1 million of qualifying assets. BPR and APR often eliminated any charge to IHT, but from April 2026 the reliefs will only halve, rather than eliminate any IHT. The effective rate of IHT on the value over £1m will therefore be 20%.

These changes will affect business owners and farmers in the main, but also individuals who have taken advantage of BPR through investments in the AIM investment market may also wish to reconsider their position, given that the relief available on these investments has been significantly reduced.

It is important to note that even with the changes, BPR and APR still remain important and useful reliefs. Business owners, farmers and individuals should take advice on what their likely IHT exposure would be light of the changes, consider what action they may wish to take and when to take such action.

Pensions

At the current time, accumulated pension funds usually pass free of inheritance tax. However, the Chancellor also announced that measures will be introduced to tax “unused” pension funds on death, as well as death benefits payable from pension schemes. Those who have significant pension pots and are using them as a tax and estate planning tool should be assessing the new exposure to tax on death and reviewing and changing any estate and tax-planning strategies where necessary.

Second home owners

The budget has introduced a significant change for landlords with second homes. The stamp duty surcharge on second homes will increase from 3% to 5%. This means that purchasing additional properties will become more expensive, potentially impacting your investment decisions. For example, on an average property priced at £371,958, this increase translates to an additional £7,439 in stamp duty.

Additionally, the forthcoming Renters’ Rights Bill aims to transform the private rental sector. Key measures include abolishing Section 21 ‘no fault’ evictions, introducing periodic tenancies, and limiting rent increases to once per year. These changes are designed to provide greater security for tenants but will require landlords to adapt their management practices.

We recommend reviewing your property portfolio and considering the financial implications of these changes. Our team can help you navigate the new regulations and ensure that your rental properties remain compliant and profitable.

In summary, the 2024 Autumn Budget presents both challenges and opportunities for farmers. By staying informed and taking timely legal advice, you can better navigate the new landscape.

This article was first published in the December 2024 edition of South East Farmer.

This content is correct at time of publication