UK Budget offers little change for rural Scotland

Press Release

Scottish Land & Estates (SLE), the rural business organisation, has described today’s UK Budget as a missed opportunity to ease inheritance tax pressures on family farms and rural businesses.

Despite some speculation that Prime Minister Andy Burnham’s arrival in office over the summer could prompt a rethink, Chancellor John Healey’s Budget brought confirmation there would be no changes to Agricultural Property Relief (APR) or Business Property Relief (BPR) at present.

The Chancellor announced that the lifetime limit for Business Asset Disposal Relief will be halved from £1 million to £500,000 from 6 April 2027. Gains above the limit could be taxed at 24%, rather than the 18% rate available under the relief.

SLE welcomed the extension of the 5p fuel duty cut and the VAT cut on household electricity to 1 July 2027. It also welcomed the suspension of the 4% tariff on kerosene, which the Treasury says will benefit 142,000 Scottish households that rely on heating oil, as well as the temporary suspension of fertiliser import tariffs until December 2027 - although questions remain about the potential impact of the forthcoming Carbon Border Adjustment Mechanism on agricultural input costs.

The organisation also noted the higher business rates relief thresholds for qualifying retail, hospitality and leisure premises in England, alongside the £100 energy payment for households in council tax bands A to D in England.

According to the Treasury, the Scottish Government will receive an additional £600 million through Barnett consequentials, including funding made available through the significant uplift in support for household energy costs.

Stephen Young, Director of Policy at Scottish Land & Estates, said: “This Budget offers relatively little in the way of new measures specifically aimed at Scotland’s rural businesses and communities.

“There had been hope that the new Chancellor would revisit the ill-advised inheritance tax changes introduced by Rachel Reeves, and it is disappointing that an opportunity has been passed up to address a damaging policy affecting family farms and rural businesses.

“The announcements on business rates and household energy support in England now places the spotlight on the Scottish Government’s response in its own Budget in early December.

“Scotland’s non-domestic rates system is not fit for purpose and needs fundamental reform. In the meantime, raising relief thresholds, as is happening in England, would take more small businesses out of the system and provide practical help at a time when many are struggling with mounting costs.

“High energy costs continue to put rural households under pressure, particularly those living in less energy-efficient homes, and a Scottish equivalent to the £100 energy payment in Scotland would help ease that burden.

“We welcomed the Scottish Government’s recent extension of the Scottish Emergency Heating Oil Scheme into the winter. Today’s announcement on the kerosene tariff is another positive step, and we hope these measures will help ease heating costs for rural households.”