The Rural Update: Tax reform needed

Viewpoint

It’s far too early to crack open the English sparkling wine, but reports that the government is at least thinking about amending its controversial Inheritance Tax reforms – dubbed the Family Farm Tax – are encouraging. However, the current thresholds being discussed (see article below) would still leave larger farming businesses and many estates exposed. Meanwhile, the frenzied reaction that greeted Tory leader Kemi Badenoch’s promise that she will scrap Stamp Duty on primary home purchases if elected, highlights that wider tax reform is much needed. Our tax code is one of the world’s most complicated and holds back aspiration, mobility and innovation. With the pressure piling on our traditional political parties, radical tax reform to encourage investment and entrepreneurship could be a vote-winner.

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Commodity markets

Wool prices up

With demand from international buyers for quality cross-bred wool outstripping supply, prices are at their strongest for a decade, according to British Wool. At its latest auction on 7^th October, the co-operative recorded an average sale price of £1.18 per kg, compared with last season’s average of £1.00. Prices were 14.2% higher than the mid-September sale and  values have climbed 22.5% over the past month. Global textile and carpet manufacturers are seeking natural, sustainable fibres to meet consumer expectations, says Chief Executive Andrew Hogley.

Dismal harvest 

Provisional estimates from Defra confirm that English farmers experienced one of their worst harvests on record this year. Although at 1.5 million hectares, the area of wheat planted was up 8.8% compared with 2024, output only rose 4.9%, with yields slipping 3.6% to 7t/ha. The 4.2 million-tonne barley harvest represented a 14% decline from 2024. Oilseed rape was the bright spot with production rising by 5.5% in 2025 to 722,000 tonnes, despite an 18% reduction in planted area. The increase was driven by a 29% increase in overall yield.

The headline

IHT relief?

Reports are circulating that the Treasury is planning a rethink of its controversial Inheritance Tax reforms that would slash the amount of Agricultural (APR) and Business Property Relief (BPR) that can be claimed.

There is speculation that the government is considering replacing its current proposals with a new model put forward recently by Cen Tax.

Under the approach, full APR and BPR would be available up to £5 million per person (£10 million for couples) where farmland or business assets make up at least 60% of an estate. Between £5 million and £10 million, there would be 50% relief, but no relief beyond £10 million.

Speaking at last week’s Conservative Party Conference, Kemi Badenoch also confirmed that she would axe the tax if the Tories win the next election.

News in brief

Stamp duty surprise

A more surprising conference announcement came when Badenoch said she would scrap Stamp Duty Land Tax on the purchase of primary residences if she won power. "We must free up our housing market, because a society where no one can afford to buy or move is a society where social mobility is dead." The move will put pressure on Labour to do something similar or risk property markets freezing in the run-up to the next election.

Gove admits trade mistake

Also speaking at the conference, former Defra Secretary Michael Gove admitted that the free-trade deals negotiated with Australia and New Zealand by the previous Conservative administration were bad for UK farmers. Meanwhile, as reported by The Grocer, supermarket Morrisons is trialling an expansion of its Australian beef range.

Welsh beaver approval

The Welsh Government is extending European Protected Species status to European beavers, making it illegal to deliberately harm them or damage their habitats. The legislative changes bring Wales into line with England and Scotland in recognising beavers as a native species requiring protection. Rural Affairs Minister, Huw Irranca-Davies, said a Wales Beaver Forum would be set up to help manage farmer concerns about the impact of beavers.

Chicken legal claim

The UK’s largest environmental lawsuit has also just been launched. Law firm Leigh Day is representing 3,943 businesses and homeowners who accuse the poultry business Avara Foods and Welsh Water of polluting the Rivers Wye, Lugg and Usk, and their tributaries, since 2019. The Economist magazine recently labelled Leigh Day as the real government opposition, given the political influence and ramifications of the cases that it takes on.

Scottish burning delay

Citing the recent spate of wildfires, the Scottish Government has delayed the implementation of new licensing conditions for muirburn that were due to come into force in the New Year until autumn 2026. Muirburn is the intentional and controlled burning of moorland vegetation to encourage new growth for the management of moorland game and wildlife, or to improve the grazing potential of the moorland for livestock or deer.

Fake meat names banned

The European Parliament has just voted to ban plant-based food manufacturers from using terms such as “burger” and “steak” to describe their products. The 355-247 majority vote is seen as a victory for livestock farmers who say the labels threaten their industry and livelihoods. Similar rules already apply to the dairy sector. You will, for instance, find oat drink, not oat milk, on EU shelves.

Helm’s farming future

Climate scientist, government advisor and previous Knight Frank Rural Report interviewee Dieter Helm has just published a thought-provoking new paper The future of British farming. In it, Sir Dieter claims that the corporatisation of agriculture and the introduction of more technology and the use of data will have profound implications for family farming businesses.

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Properties of the week

New Zealand farm and lodge

This week, we’re back in the Southern Hemisphere, visiting Ora Station near Akitio Beach on the east coast of New Zealand’s North Island. This stunning 6,155-acre cattle and sheep-breeding property features 976 acres of flat finishing country. It also includes an 865-acre deer-fenced tourism business, Glenora Hunting & Lodges. Further diversified income from honey and carbon is delivered by a 282-acre Manuka plantation. For more information, please contact Georgie Veale.

Historic Kent estate home to rent

Knight Frank’s Rural Consultancy team in Kent has an intriguing option on offer. Newhouse at Mersham, near Ashford, which was once home to Countess Mountbatten of Burma and Lord Brabourne, is part of the idyllic 2,700-acre Hatch Park Estate. Now available to rent, the nine-bed period property costs £6,995 a month. For more information, please contact Katie Bundle.

Discover more of the farms and estates on the market with Knight Frank

Property markets Q3 2025

Country houses – Budget uncertainty

The average price of country houses has fallen by 5.4% so far this year, according to the Q3 edition of the Knight Frank Prime Country House Index. Properties worth below £1 million dropped by 4.7%, while those worth over £1 million lost 6.7% of their value. Owners of higher-priced properties are particularly concerned about any further property taxes being announced by Rachel Reeves as part of her Autumn 2025 Budget, which is due to be delivered at the end of November, points out Tom Bill, Head of UK Residential Research.

Read more of Tom’s numbers and insight