Budget a wasted opportunity?

Viewpoint

If last week’s comments from Farming Minister Stephen Morgan, discussed below, are to be taken at face value, it looks like the farming industry is set for disappointment tomorrow (28 October) when Chancellor John Healey steps up to the despatch box to deliver his first Autumn Budget. Scrapping the ‘family farm tax’ would be a golden opportunity for new Prime Minister Andy Burnham to deliver the rural reset that he aspires to, but it seems unlikely his ‘good vibes’ approach to politics is going to extend that far. While there may be some positive news in the shape of a possible hike to the Annual Investment Allowance, that alone won’t be enough to reverse the collapse in farmer confidence that has seen plans for future business investment plummet.

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In this week's update

• Tale of two conflicts 
• IHT Budget hopes wilt
• Fertiliser tax rates
• Pig stunning call
• NE phosphate ruling
• Healthy eating inflation
• Google Finn forest fail
• Win Wiston wine
• Property of the week
• Property markets Q3 2026

Commodity markets

Tale of two conflicts

November wheat futures dropped by over £10/t last week to around £190/tonne following news that Ukraine and Russia are open to renewing peace talks. However, even if the talks do go ahead, it is uncertain how quickly damaged Black Sea ports will be ready to resume grain exports. Meanwhile, red diesel prices are now commanding an eye-watering 75% premium on year-ago values as Yemen’s Houthi rebels continue to hit energy targets in Saudi Arabia. But crude oil prices did dip slightly at the beginning of the week as investors weighed the threat of further attacks against concerns that elevated prices could eventually erode demand.

The headline

IHT Budget hopes wilt

Despite pressure from organisations across the agricultural and landowning sectors, hopes are fading that new Chancellor John Healey will scrap his predecessor’s controversial Inheritance Tax (IHT) reforms in his first Autumn Budget tomorrow (28 October).

Speaking during a debate in the House of Commons last week, Farming Minister Stephen Morgan said the government’s position on the reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) introduced by Rachel Reeves in 2024 was now “settled”.

Previously, it was possible to obtain up to 100% IHT relief on the value of agricultural land and business assets, but under what has become known as the ‘family farm tax’, that relief has been slashed to 50% on estates valued at over £2.5 million, or £5 million for married couples.

Other Budget measures being called for to help farmers struggling with high costs and extreme weather include raising the Annual Investment Allowance to at least £5 million and the introduction of emergency interest-free ‘keep Britain growing’ loans.

News in brief

Fertiliser tax rates

The tax on fertiliser imports under the Carbon Border Adjustment Mechanism (CBAM) is set to be lower than feared following the recent release of a briefing note by HM Revenue & Customs. It indicates that once CBAM is implemented on 1 January 2027, importers will face a charge of £1.45 per tonne of CO₂ equivalent. This equates to about £3.77/tonne for ammonium nitrate.

Pig stunning call

Defra is consulting on banning the use of carbon dioxide stunning at pig abattoirs. It says the process can cause unnecessary suffering and should be replaced with more humane alternatives. However, the Association of Independent Meat Suppliers is calling for the consultation to be delayed until sanitary and phytosanitary negotiations with the EU are concluded. It argues UK producers will be at a disadvantage if imports of pork slaughtered using carbon dioxide are still allowed. The consultation closes on 21 December.

NE phosphate ruling

A recent court ruling could have implications for the custodians of environmentally sensitive areas. Following a judicial review, Mrs Justice Lieven found that Natural England had acted unlawfully by failing to take appropriate steps to address phosphate run-off from a farm that had affected Catfield Fen, an important wetland that is part of the Norfolk Broads Special Area of Conservation.

Healthy eating inflation

The Energy and Climate Intelligence Unit has just published a new report claiming that those who eat purportedly healthier diets have been hit less hard by food price inflation. It says those families following the NHS’s Eatwell guidelines with more fruit, vegetables and fish paid 2.7% extra for their groceries in 2025 compared to 4.5% for those consuming a “standard” diet containing more chocolate, coffee, meat and dairy.

Google Finn forest fail

Google has been forced to halt work on two huge new data centres in Finland after it was accused of felling 400,000 trees without gaining the necessary environmental consents. The tech firm is spending billions on an AI programme in the Nordic country, including a long-term deal to buy half of the power generated by one of the country’s nuclear reactors.

Win Wiston wine

A case of English sparkling wine from the Wiston Estate is up for grabs. To have a chance of winning this fabulous prize, entrants just need to take the 2026 Knight Frank Estate Staff Salaries Survey. The survey tracks the salaries of those employed by landed estates and farming businesses, as well as the issues currently being faced by rural employers, including higher taxes and more legislation. Take the survey.

Property of the week

Rare Welsh estate

The Rural Update heads to Wales this week for the launch of a rare farming and residential estate in the picturesque Dee Valley National Landscape. The 704-acre Penbedw Uchaf Estate at Nannerch, near Mold in Flintshire, includes an attractive stone farmstead, full of period features, that is believed to date back to Cromwellian times. A range of traditional and modern buildings provide extensive equestrian, agricultural, storage and diversification potential, subject to any necessary consents. The estate’s traditional grassland is still framed by ancient field patterns and blocks of woodland that provide a strong sense of character and heritage. Ty Uchaf is an off-lying 188-acre block of land with a large modern livestock building. The guide price is £6.7 million. Please contact Christopher Dewe for more information.

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

Property markets Q3 2026

Country houses

The average value of residential property in rural areas continues to decline, according to the Knight Frank Prime Country House Index. Tom Bill, Head of UK Residential Research, said: “The impact of rising mortgage rates and political uncertainty is being felt in the country market.” Average prices fell 1.4% in Q3 2026 and 4.2% in the year to September. Property exchanges were 2% lower in the third quarter compared with last year, while the number of offers made was 10% lower. Read more of Tom’s insight.