EQ Summer 2025 Agriculture Bulletin

Welcome to Summer

With the busy spring period now complete, hopefully the readers of our EQ Summer 2025 Agriculture Bulletin can appreciate a relatively quiet few months before harvest commences. Crops and livestock are currently looking well considering the warm and dry spells of weather experienced throughout March, April and May. We can only hope that with some fair weather and decent prices, 2025 will turn out reasonably well.

The quieter summer months also provide an opportunity for reflection and to start working on plans for next season, which of course starts as the soon as the current harvest is complete. Despite the challenges facing the sector we hope you take time to enjoy the season and reading this quarters edition.

Economic update

The Bank of England cut the base rate by 0.25% to 4.25% on 8th May providing some relief for those with variable rate borrowing.

The next interest rate decision date will be on 7th August, but with inflation at 3.4%, well above the BOE’s target of 2%, scope for further interest rate cuts in the short term may be limited. However, the Pound has strengthened significantly against the USD Dollar over.

the past year, from £1 being worth $1.27 to $1.36 at present, reducing the cost of imported goods which are denominated in USD, thereby reducing inflation. On the negative side, this does make US agricultural exports more competitive, perhaps one factor behind the current weak grain trade.

It’s Show Time…

As we write this bulletin our EQ Agriculture team are in the thick of show season. Several fantastic events have already taken place. Not only have we met many old and new faces, but the weather has also played ball. Long may that continue!

We have numerous local shows and events to attend over the next few months, notably
the prestigious Scottish Game Fair at the beginning of July where many of the team will be out in force (you will also find our stand in the SLE Pavilion). Please look out for the EQ gilets and say hello!

We also have the Border Union Show on the 25th-26th July to look forward to and then the Turriff Show on the 3rd-4th August where we are represented as one of the main sponsors. We look forward to welcoming you onto our stand for a catch up and a bite to eat.

If you are planning to attend any of the following shows, please look out for us:

Arable Scotland 02 JULY
Skelton Show 05 JULY
Scottish Game Fair 05 – 07 JULY
Kirriemuir Show 13 JULY
Penrith Show 19 JULY
Border Union Show 26 – 27 JULY
Perth Show 02 – 03 AUGUST
Turriff Show 04 – 05 AUGUST
Potatoes in Practice, 08 AUGUST
Balruddery Farm
Future Farming Expo DATE TBC
Agriscot, Ingliston 13 NOVEMBER

We look forward to catching up with all our readers over the course of the next few months.

Greening Rules

Farmers across Scotland are being encouraged to plan for major changes to Enhanced
Greening rules coming in 2026, as key exemptions are to be phased out under new
the Ecological Focus Area (EFA) requirements. The shift means areas like Fallow and
Temporary Grassland Rotation over 15 hectares will now fall under stricter regulations.

Industry leaders, including NFU Scotland and land use experts, have welcomed the
clarity but voiced concern that current Scottish Government proposals don’t go
far enough to meet environmental and farming sustainability goals. With £140
million annually allocated to Greening payments, critics argue that the return on
environmental benefits remains low. From 2026, farms over 15 hectares must
ensure at least 5% of arable land is set aside for nature.

Stakeholders call for flexibility in future schemes, supporting both production and
environmental aims. Some advocates for innovative practices, such as using GPS
collars for grazing and selective breeding for low-impact livestock.

As planning for 2026 ramps up, farming leaders stress the need for clear, adaptable
rules to balance food production and nature recovery. The government is also developing Tier 2 and 3 support schemes for 2027 to support this transition.

Have we reached peak net zero yet?

Net zero is increasingly taking on a quasireligious status. It’s impossible to attend
any land use/agricultural conference these days without speaker after speaker
standing up to affirm their belief in the new religion by declaring we are in the
midst of a “climate crisis”. Yet farmers continue to rear crops and livestock, albeit
with the normal weather challenges, and go to any supermarket and you will find
the shelves literally groaning with food. A rather strange sort of “crisis” indeed.
Disaster could of course be just around the corner, unless we repent.

Major countries such as China, India and the USA are at best paying lip service
to net zero, so it seems rather odd that Scotland has taken it upon itself to lead
the world in tackling the threat posed by “existential climate change”, when major
economies are doing much less.

In May, the Climate Change Committee advised that, for Scotland to achieve net
zero by 2045, we must reduce our beef and sheep numbers by 26% by 2035
compared to 2023 levels. This is part of a broader set of recommendations on
land use and agriculture. Please see the attached link for the full report.

It’s alarming to say the least when net zero is given priority over food security.
However, our cattle and sheep clearly need to be sacrificed to appease the gods of
climate change. Perhaps it will take a real crisis to awake people form their stupor.

Reflecting on Cereals 2025, a successful showcase with Sumer Agri

Earlier this month, we had the pleasure of attending Cereals 2025, one of the
UK’s premier arable farming events, as part of Sumer Agri – our collaborative
venture with fellow Sumer member firms, Monahans and Scrutton Bland.

Representing the agricultural expertise across our three firms, Sumer Agri
was proud to connect with farmers, landowners, and agribusiness professionals from across the country. Our joint stand provided a fantastic platform to share insights, answer questions, and highlight how our tailored financial and advisory services can
support the long-term sustainability and growth of rural enterprises.

The event was a valuable opportunity to strengthen relationships within the sector
and to demonstrate our commitment to supporting the agricultural community
through ever-evolving challenges – from regulatory changes to diversification
strategies.

We’d like to thank everyone who stopped by the Sumer Agri stand. Whether it
was to discuss succession planning, tax efficiency, or simply to share a coffee and
a conversation, we thoroughly enjoyed engaging with you.

If you missed us at Cereals 2025 and would like to learn more about how EQ
and Sumer Agri can support your farming business, please don’t hesitate to get in
touch. Alternatively, catch us at one of your local Scottish Shows such as the
Turriff Show, the Scottish Game Fair, Skelton Show, Kirriemuir Show, Black Isle Show or the Border Union Show.

Do we all remember the Super Deduction?

The super deduction was an enhanced capital allowance regime covering the period between 1 April 2021 and 31 March 2023. This regime applied to companies only
and provided a 130% allowance on new and unused plant and machinery. This led to businesses rushing to buy new kit in Spring 2023 to take advantage of the generous
tax reliefs available.

For example – a tractor purchased in April 2022 for £75,000 qualified for a 130% super deduction allowance. Resulting in £97,500 allowances available, saving corporation tax at 19% of £18,525. This means the after-tax cost of the tractor effectively ends up as £56,475 (£75,000 – £18,525)… Great right?

However… The super deduction regime has a significant sting in the tail, which was not well published when the regime was introduced. If this same tractor is sold in the year ended 31 December 2025 for £50,000, then the full sale amount will be chargeable to tax at 130%, meaning £50,000 x 130% = £65,000. This means the super deduction has really been a bit of a non-event, and leaves the business exactly as they would have been without the super deduction.

Now to add a little salt in the wound. HMRC have recently increased Corporation
Tax to 25% for companies with profits over £250,000, meaning that, in this example,
the £65,000 would be subject to tax at 25%. This would result in an additional tax liability of £16,250. The 19% small companies Corporation Tax rate only applies where profits are below £50k. The next £200k of profits are taxed at 26.5% and if profits are over £250k then all profits are taxed at 25%. The position is therefore potentially worse for companies with profits in the £50-250k range. Anyone would think this had been done on purpose as a revenue generator.

It is important for companies to keep detailed records of all super deduction assets given that HMRC require these assets to be separately pooled. This therefore increases the administration for companies that have claimed this super deduction allowance.

Preparing for tax payments on account

Tax payments on account due by individuals for 2024/25 tax liabilities are payable by 31 July 2025. Now is therefore the time to discuss with your tax advisor whether or not your 2024/25 taxable income levels have changed materially from the previous year.

If income is expected to be down, then there may be an opportunity to reduce the impending payments.

Ideally, draft accounts on which 2024/25 tax liabilities are based, or at least credible management figures for the year, might be available so that a proper assessment of tax liabilities can be made. Care is required, however, as lowering tax payments on account without evidence of lower taxable income is dangerous, as interest does apply to underpayments.

Late summer can be a time when cash flow is particularly stretched on the farm, so it
is important to provide for all outgoings, including tax payments on account.

UK-USA trade deal

The UK was one of the first countries to strike a trade deal with the new Trump administration when an agreement was announced at the start of May. The main impacts relating to agriculture concern beef and bio ethanol.

Beef
Under the deal there is scope for a reciprocal 13,000t beef quota on a tariff free basis. The UK currently makes no material beef exports to the US while the US is allowed to export up to 1,000t of beef to the UK with a 20% tariff.

While the deal will increase imports of US beef it does perhaps allow the UK the opportunity to export high quality, high welfare beef to the US, hopefully at a premium price.

Any beef coming into the UK from the US would have to meet UK food standards.

Bio ethanol
The US is a low-cost bio ethanol producer based on maize grown in the Mid-West corn belt.

Currently the UK imports 5-600 million litres of US bio ethanol, with a 19% tariff
in place. The deal allows for tariff free access on up to 1.4 billion litres.

The deal is therefore a threat to the UK bio ethanol industry which uses c. 2mt of feed wheat annually and produces feed and CO2 as useful by products.

Sector focus – eggs

Judging by queries from potential new entrants and expansion by existing producers, there would appear to be an uptick in interest in the egg sector, going by our client base at least.

This is perhaps not surprising given that margins in other sectors are under pressure, with an egg enterprise being seen as a way to boost the bottom line and diversify the business.

The capital cost for a new typical 32,000 bird unit is c. £1.6m, with additional funding required for working capital on top of this.

Approximately half the building cost will relate to internal plant and machinery which can normally be written off against taxable income in year of purchase, giving the business an immediate tax benefit. The balance of the capital expenditure relating to the building structure would qualify for an annual 3% Structures and Building Allowance, so the tax incentives here are less attractive.

SRUC’s Farm Management Handbook figures indicate a typical gross margin of £9,073/1,000 birds per annum. Therefore, a 32k bird unit could be expected to produce an annual gross margin of £290k versus a capital cost of £1.6m. The gross margin is of course before overhead costs such as labour, interest, depreciation and electric, which would need to be factored in. Skilled producers will be capable of better performance; likewise new entrants may struggle at first to achieve this margin if there is an initial learning curve. As always, we would advise a detailed investment appraisal for any new enterprise.

Per the June Census figures total fowls for egg production at June 2024 in Scotland amounted to 5.98m, back from a peak of 7.16m in 2019, but well above the 4.46m
recorded in 2012. There would therefore appear to be scope for some expansion of the
current flock.

A summary of the pros and cons relevant to the sector are set out below.

EQ Accountants Proud to Sponsor Diversified Farm of the Year at the Scottish Agriculture Awards 2025

We are delighted to announce our sponsorship of the Diversified Farm of the Year award at the upcoming Scottish Agriculture Awards, taking place on 23rd October 2025.

This award celebrates innovation, resilience, and forward-thinking within the farming sector – recognising farms that have successfully diversified to create sustainable, thriving businesses. As long-standing advisers to rural and agricultural clients, we understand the challenges and opportunities that come with diversification, and we’re proud to support those leading the way.

We look forward to celebrating the achievements of Scotland’s most enterprising farms and wish all nominees the very best of luck.

We are always happy to offer free, no obligation, initial consultations, and often act on a consultancy basis only. For more information on any of the services outlined in this bulletin, or to discuss a particular issue with one of our advisers, please contact our Agriculture specialists.

Disclaimer: We make every effort to ensure that the information provided is accurate and up to date; however, EQ cannot be held responsible for any action taken, or not taken, as a result of reading this publication. Contact us at agriculture@eqaccountants.co.uk or 01307 474274 for specific advice on how the issues discussed could affect you.