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Budget 2026 for Farmers: What Changed and What Did Not

The Autumn Budget was delivered on Wednesday 28 October 2026. Reports say it left the farm inheritance tax changes in place, extended the fuel duty and red diesel relief by six months, and did not raise the Annual Investment Allowance. This page sets out what changed, what did not, what farming bodies said, and what a livestock farm should do next.

Blog Updated 3 November 2026 9 min read

Quick answer

As of 3 November 2026, the Autumn Budget that Chancellor John Healey delivered on 28 October did not reverse the farm inheritance tax changes. The rule stays a combined £2.5 million allowance of 100% relief, then 50%. FarmingUK and Agriland report a six-month extension of the fuel duty relief, and FarmingUK says the 3.7p-a-litre red diesel cut now runs to 1 July 2027. Capital allowances, loans and pension rules did not change. These are trade press reports, and we have not read the Treasury documents.

What did the Autumn Budget 2026 change for farmers?

Very little that affects a livestock farm directly. FarmingUK and Agriland both published their reports on 28 October 2026, the day Chancellor John Healey delivered his first Budget. The main relief for farmers was on fuel.

Fuel and red diesel. FarmingUK reports that the temporary 3.7p-a-litre cut in red diesel duty was extended by six months, to 1 July 2027, and that it covers tractors, combines and other farm machinery. Agriland describes the main relief as a six-month extension of the 5p fuel duty cut. The two reports describe the measure differently, so read the Treasury notice or ask your accountant before you plan around a rate. Our guide to red diesel and capital allowances explains how the rebate is claimed.

Fertiliser tariffs. The government announced tariff cuts on selected imports just before the Budget, 26 October in FarmingUK's report. Agriland says the fertiliser tariff is removed until the end of 2027. The NFU said the benefit for farm businesses is likely to be minimal, because much imported fertiliser already comes in tariff-free and because savings depend on whether they are passed down the supply chain.

Key dates

30 October 2024: qualifying gifts made from this date count towards the new allowance if the donor dies within seven years.
6 April 2026: the £2.5 million allowance applies to deaths on or after this date.
26 October 2026: tariff cuts on selected imports announced ahead of the Budget.
28 October 2026: Chancellor John Healey delivers the Budget.
1 July 2027: the extended red diesel relief ends, according to FarmingUK.
6 April 2027: most unused pension funds and death benefits start to count in inheritance tax for deaths on or after this date.

What did the Budget not change?

Inheritance tax. Neither report found any change to the agricultural property relief (APR) and business property relief (BPR) rules. FarmingUK says the changes in force from 6 April 2026 were not reversed, and Agriland says no changes to inheritance tax were announced. The NFU and CLA had both asked for a reversal, so the result is a disappointment for the bodies that campaigned.

The Annual Investment Allowance. The NFU asked for it to rise from £1 million to at least £5 million and to cover agricultural buildings and infrastructure. FarmingUK reports that was not announced, so the figure on GOV.UK is still £1 million.

Loans and carbon border charges. The NFU's proposed interest-free Keep Britain Growing Loans for farms hit by drought, disease and trading pressures were not announced, according to FarmingUK. It also reports that the Budget did not address the Carbon Border Adjustment Mechanism, due in January 2027, which could add charges on some fertiliser imports.

Pensions. NFU Mutual's Sean McCann said there were no changes to the plan to include pensions in inheritance tax calculations. FarmingUK reports that from 6 April 2027 most unused pension funds and pension death benefits will count for deaths on or after that date. McCann warned that farmland held in a self-invested personal pension does not qualify for the same agricultural reliefs, and that income tax can also apply if the pension holder dies after age 75. He advised taking professional advice before changing anything.

What did farming bodies say about the Budget?

NFU president Tom Bradshaw welcomed the red diesel extension but said fuel prices are 65% higher than a year ago, so it gives little cashflow relief, and he said farmers feel abandoned on inheritance tax, according to FarmingUK. The NFU had set out its asks on 23 September 2026. They were:

Raise the Annual Investment Allowance to at least £5 million and widen its scope. Not announced.
Fund temporary, interest-free Keep Britain Growing Loans. Not announced.
Make sure the Carbon Border Adjustment Mechanism does not disadvantage domestic food producers. Not addressed, according to FarmingUK.
Remove the changes to agricultural and business property relief. Not done.
Introduce enhanced capital allowances for incorporated and unincorporated businesses. We found no report that this was announced.
Extend the cut in duty to red diesel. Extended, according to FarmingUK.

The CLA, the Tenant Farmers Association and the Countryside Alliance made their own requests before the Budget, as Farmers Guide reported on 26 October. We found no report that those were adopted. We have not read a post-Budget statement from the CLA, the Tenant Farmers Association, NFU Scotland or the Farmers' Union of Wales, so we do not quote them here.

What are the inheritance tax and allowance rules now?

For deaths on or after 6 April 2026, 100% relief applies to the first £2.5 million of qualifying agricultural and business property combined, and GOV.UK guidance gives 50% relief above that. Because the standard inheritance tax rate is 40%, the effective rate on the excess is up to 20%. Our inheritance tax guide walks through the detail.

The allowance is transferable. Unused allowance passes to a surviving spouse or civil partner, so GOV.UK says a couple can pass on up to £5 million of qualifying assets between them. The claim must be made within four years of the survivor's death or within six months of the personal representatives starting, per the GOV.UK guidance. Tax can be paid in ten equal annual interest-free instalments, as the GOV.UK policy paper sets out.

The £2.5 million figure moved. The reform started at £1 million in 2024, and the government raised it on 23 December 2025. The government's own estimate, in that announcement, is that about 85% of estates claiming APR will pay no more inheritance tax in 2026 to 2027.

Which farms does this affect, and what does it mean in money terms?

Owner-occupier farmers with land, buildings and a farmhouse are most exposed to the inheritance tax rules, whether they run cattle, sheep or both. Livestock, machinery and harvested crops are not agricultural property for APR. Whether they qualify for business relief is a question for your accountant and solicitor.

Sole traders and partnerships should ask how business relief applies to their trading assets. Tenants should ask how their agreements are treated. GOV.UK gives 100% relief for let land on a tenancy that began on or after 1 September 1995, and 50% in most other cases, as our APR and BPR guide explains.

For illustration only, from our guide: a single person with £4 million of qualifying farmland and no transferred allowance gets 100% relief on £2.5 million and 50% on the other £1.5 million. That leaves £750,000 taxable, and 40% of that is £300,000, before any nil-rate band. Your figure depends on your own assets.

On the paperwork side, the red diesel relief and any machinery plans land in your accounts and VAT records, so the clean records in our farm bookkeeping basics matter whichever way the rules go.

What is still unclear after the Budget?

The exact wording of the fuel measures. The two reports we opened describe the red diesel and fuel duty extension differently, and we have not read the Treasury's Budget documents or the amended duty rates notice. Treat the 1 July 2027 end date as FarmingUK's report until you have checked GOV.UK.

How the figures are read. The government estimates that about 85% of estates claiming APR will pay no more inheritance tax in 2026 to 2027, with up to 1,100 estates across the UK paying more, per its 23 December 2025 announcement. Farming bodies say the changes still harm planning. A survey by the Ulster Farmers' Union, reported by FarmingUK on 20 October, found 89% of respondents reporting more stress or worry. The number of respondents was not stated, so treat it as the union's own survey, not a national measure.

What comes next. We found no report of a further inheritance tax consultation or announcement after the Budget, so we say nothing about one.

What should farmers do now?

The rules did not move, so the sensible step is to plan to the rules as they stand and ask your accountant what they mean for you. This checklist does not depend on a date:

List your land, buildings, farmhouse and cottages, with a current value for each, and note which are let.
Find your will, and check it matches who owns what and how the farm is run.
List lifetime gifts since 30 October 2024, with date, value and recipient.
Check where any farmland is held. If land sits inside a pension, ask a professional adviser about the position from 6 April 2027.
Put written tenancy and grazing agreements, with start dates, in one folder.
If you buy red diesel, check the rate and the end date with your supplier or on GOV.UK before you plan fuel costs.
Book your accountant and solicitor, and ask what the rules mean for your estate, your machinery plans and your fuel costs.

Keep the underlying records too: our guide to how long to keep farm records gives the clocks, and the herd basis guide covers stock values. If you are on cash basis or accruals, see cash basis or accruals. Pairing this with the Making Tax Digital thresholds check keeps one tax calendar. Our directory of farm accountants and tax advisers lists firms that say they work with farms.

FarmHQ, the farm office app for UK cattle and sheep farms, is in beta. It keeps livestock, medicine and money records in one place, so the numbers an accountant asks for are easier to pull together. Ask Farmer Joe drafts and you confirm. FarmHQ does not give tax advice and files nothing with HMRC; Making Tax Digital filing follows in 2027. See FarmHQ pricing.

What do farmers actually ask?

Did the Autumn Budget 2026 change farm inheritance tax?

No. FarmingUK and Agriland both report that the Budget on 28 October 2026 did not reverse the agricultural and business property relief changes. For deaths on or after 6 April 2026, 100% relief applies to the first £2.5 million of qualifying property combined, with 50% above it. Ask your accountant how this affects your estate.

Was the red diesel cut extended in the Budget?

FarmingUK reports that the temporary 3.7p-a-litre red diesel duty cut was extended by six months, to 1 July 2027. Agriland describes the main farm relief as a six-month extension of the 5p fuel duty cut. The two reports differ, so check the Treasury notice or GOV.UK before you plan fuel costs.

Did the Budget raise the Annual Investment Allowance?

No. The NFU asked for it to rise from £1 million to at least £5 million and to cover agricultural buildings. FarmingUK reports that was not announced, so GOV.UK's £1 million figure still stands. Ask your accountant how it applies to machinery you plan to buy.

Will pensions count for inheritance tax on farms?

FarmingUK reports that from 6 April 2027 most unused pension funds and pension death benefits will count for deaths on or after that date, and the Budget made no change to that plan. NFU Mutual warns that farmland held in a self-invested personal pension does not qualify for agricultural reliefs. Take professional advice.

What is the inheritance tax allowance for farms now?

For deaths on or after 6 April 2026, GOV.UK limits 100% agricultural and business property relief to the first £2.5 million of qualifying property combined, with 50% relief above it. Unused allowance can pass to a surviving spouse or civil partner, so a couple can pass on up to £5 million.

What should a livestock farm do after the Budget?

Plan to the rules as they stand. List land, buildings and the farmhouse with current values, check your will, list lifetime gifts since 30 October 2024, check where any farmland is held, gather tenancy agreements, and book your accountant and solicitor to ask what the rules mean for your estate, machinery and fuel costs.