EQ Winter 2025 Agriculture Bulletin

Welcome to our Winter 2025 Bulletin

As we reach the end of a fast-moving year for the sector, we’ve pulled together a round-up of insights, updates and opportunities designed to support you as you plan for the year ahead. From diversification success stories to new funding solutions and sector wide events, we hope this edition gives you fresh ideas and practical guidance to take into 2026.

As always, we’re here to help you move forward with clarity and confidence, whatever the next season brings.

Our Predictions for 2026

It’s that time of year again when we attempt to make predictions for the years ahead.

The predictions made in previous years are by and large still playing out as expected. To give two examples, we have previously commented on the Bank of England’s inability to meet its 2% inflation target (still very much the case) and that the wheels would start to come off the energy transition. Regarding the latter, Conservative leader Kemi Badenoch has just announced that the party would reverse the 2030 ban on ICE cars if re-elected.

Given that many of the earlier predictions are still in play, our list is somewhat shorter this year. Some of the predictions are perhaps obvious, but if they happen, the ramifications could be very significant. Here goes…

Beware the Gnomes of Zurich

Okay, you probably think we have completely lost the plot this time. The Gnomes of Zurich was a disparaging term used by Labour Politicians in the 1970s to describe international financiers who refused to support their tax and spend policies by lending them more money. With public debt still rapidly increasing (c. £150bn in 2024/25), interest on the national debt over £100bn, tax rises slowing growth and the complete lack of any “adults in the room when it comes to the management of the economy, the Gnomes of Zurich may well be making a comeback in 2026. Do keep an eye out for them.

Taxpayers start to get militant

The British are known for their tolerance, but there is a limit, and as far as tax rises are concerned, we are now at that point. Interestingly, the farmers friend, Jeremy Clarkson has just banned all Labour MPs from his pub in protest over tax policy. Could this be the start of a new trend where those who legislate are made to feel the consequences of their actions? The British may be about to become a lot more French in their attitude.

The AI bubble goes pop

Ok, a bit obvious we admit. AI will certainly be useful and have a transformative impact in some areas, but the question is whether this can be sufficiently monetised to justify the billions being invested? We think not. AI may be great for enhancing your online searches or for drafting reports but if you need someone to fix your leaking roof it’s probably not much help.

How diversification can potentially help aid farm succession

One of the obstacles to succession planning is the lumpy nature of faming assets, especially land, making it difficult to divide assets fairly between children. One solution to this dilemma might be to try and grow the actual size of the business through diversification into agritourism. A larger pie is always easier to divide as they say.

A wealth of opportunities potentially exists in the sector, including holiday accommodation, farm shops and cafes or the provision of farm-based experiences.

Agritourism in the right circumstances can offer additional income streams for traditional farming businesses. This diversification and subsequent additional profit can help support more generations on the farm, potentially allowing multiple family members to have the option to continue to stay on farm and creating a larger more viable business to divide up between various children when the time comes.

It remains true that any diversification project comes with its own set of challenges and risks. The feasibility of any project needs careful consideration, both at a detailed financial and operational level. This is where we can help offering advice on investment appraisal, cashflow forecasting, specialist tax issues and funding structure.

If you are considering a new business project or simply wish a review of your current farming business, please get in touch with one of our dedicated agricultural professionals.

Pre year-end tax planning

Over the next few months, we look to ensure that our clients are making the best use of all the available tax reliefs prior to the tax year end on 5 April.

Key areas to review are as follows: –

• If you trade as a company, consider whether you can make use of the £500 dividend allowance per shareholder to extract profits tax free from your company. It may also be prudent to review the benefits of accelerating all levels of dividends prior to the 2% increase in dividend tax with effect from 6 April 2026.
• Pension contributions are still very attractive, especially if you have exposure to higher rates of Income Tax, where the tax relief on offer is potentially in excess of 40%. The annual pension allowance currently stands at £60,000.
• If you can, make use of your £20k ISA savings allowance to shelter future investment returns from income and capital gains tax. It should also be noted that qualifying AIM shares invested through an ISA will attract a reduced 50% Inheritance Tax rate after two years.
• Company directors may wish to pay themselves a salary to make sure they have enough income to utilise their tax free personal allowance of £12,570, while enabling their company to claim a corporation tax deduction on the cost.

These are just some of the areas to consider and those with more complex tax affairs are likely to benefit from a more detailed review.

Excellent cereal harvest in Scotland

Despite the spring and summer droughts initial figures released by the Scottish Government highlight the fact, that in terms of yield at least, Scotland’s arable farmers have had a record harvest producing a total of 3.251mt of cereals and 152kt of oilseed rape.

The position is summarised in the table below.

Of course, averages can mask wide variances between farms, and we know from speaking with clients that those on heavier land have done significantly better than the average while those on lighter, more drought prone land have suffered badly.

Prices have of course been poor with wheat at c. £170/t and feed barley at c. £130/t. Those with good yields may not be impacted too much but those on lighter land will have to contend with the double whammy of low yields and prices. High screenings have been an issue with malting barley, with rejected loads ending up in the low value feed pile. Demand for malting barley has also been very sluggish as distillers themselves struggle to move enough product.

The kind autumn in 2024 will have played a major part in the above yields as winter crops were established in excellent conditions. If anything, the 2025 autumn drilling season has been even better with crops in the ground now looking in excellent condition. All things being equal 2026 should also be another good harvest.

For those wish to dive deeper into the figures full details can be found at here.

Tax payments on account

The end of January sees the next instalment of personal tax payments becoming due. But have you talked to your accountant about the amount payable and if that can be reduced?

Typically, January payments are a mix of a balancing payment for the previous year’s tax as well as a contribution towards the next tax year.

If you feel that due to poorer trading results or even a planned spending spree on new machinery, your overall profits in 2025/26 will be reduced, then this could lead to a welcome reduction in tax. Why not take advantage of this now?

Please speak to your advisor before you pay more than you need to at the end of January.

Smarter Finance for Farms and Rural Businesses

Looking to unlock growth, streamline finance arrangements, and respond quickly to opportunities? Duncan Wood, Commercial Finance Partner at EQ, is on hand to help. From asset finance and invoice finance to plant and machinery refinance, Duncan tailors funding solutions to match your business goals. Whether that’s expansion, diversification, succession, or improving operational efficiency.

For agri clients, this could mean upgrading machinery, investing in renewable energy, smoothing seasonal cash flow, or refinancing essential equipment. Funding becomes part of the wider business strategy, not just a reactive solution. And when urgent needs arise – a new contract, unexpected costs, or key investments – Duncan can move fast to secure the right funding.

The service is proactive, too: Duncan reviews balance sheets, identifies underutilised assets, and uncovers opportunities you may not have considered. If your farm or rural business could benefit from a conversation, your usual EQ adviser can put you in touch.

Can anyone fill the black hole?

November 26^th was the date for the much dreaded second budget of Chancelor Rachel Reeves which was preceded by unprecedented leaks, kite flying and scare stores to prepare the public for yet more tax rises.

Although tax increases were announced, thankfully there were no further adverse changes to either Inheritance Tax (IHT) or Capital Gains Tax (CGT) and in one small piece of good news it was announced that the £1m business assets allowance for IHT will be transferrable between spouses, meaning that on second death, £2m of business assets can pass tax free to the next generation, with business assets in excess of this attracting a tax charge of 20% (assuming no other IHT allowances are available).

The other main changes announced in the budget were as follows:-

• Income tax rate on dividends to increase by 2% for basic and higher rate taxpayers for 2026/27, taking rates to 10.75% and 35.75% respectively. The rates for additional rate taxpayers will remain the same at 39.35%. The £500 tax free dividend allowance to remain in place.
• Tax rates on interest income to increase by 2% from 2027/28 to 22%, 42% and 47% for basic, higher and additional rate taxpayers respectively.
• Tax rates on rental income to increase by 2% from 2027/28 to 22%, 42% and 47% for basic, higher and additional rate taxpayers respectively. NB This only applies to England as the devolved administrations in Scotland and Wales will be able to set their own property tax rates should they wish.
• From April 2029 only the first £2,000 of pension contributions made under a salary sacrifice scheme will qualify for relief against National Insurance Contributions.
• Income tax bands will remain frozen until 2031 (was previously to be 2028), dragging a greater number of taxpayers into higher rates of tax through the process of fiscal drag.
• The writing down allowance on capital allowance pools to reduce from 18% to 14% from April 2026, although the £1m Annual Investment Allowance to remain in place.
• IHT allowances to remain frozen until 2031, again dragging more estates into IHT through fiscal drag. In addition to the new £1m business assets allowance, all taxpayers qualify for the £325k nil rate band and the £175k residential nil rate band, although the latter tapers way for estates over £2m

Although the budget could have been worse the measures announced will not have brought much cheer to our reader base.

It’s also concerning that the budget continues the trend of seeing some forms of income being regarded as less virtuous than others, with “unearned income” singled out for special punishment. Those businesses that trade through a company will be hit by the rise in dividend tax rates, making it more expensive to extract profits (already subjected to 25% corporation tax) by way of a dividend. Property rental businesses have already been subjected to multiple adverse tax changes over the years and for some the news that they will have to pay an additional 2% tax on any profits they make will be the final nail in the coffin.

Stealth taxation through the freezing of allowances way into the future is also deeply unfair and the impact of this could well be exacerbated if inflation picks up.

As depressing as the tax rises announced were, what is probably more depressing is that with the Government showing no desire or willingness to control spending we will probably have to go through the whole ordeal again next year. Trouble is, there comes a point when increasing taxes no longer raises any additional money and may even reduce the total tax take as economic activity is disincentivised through punitive taxation. Students of economics will know this phenomenon as the Laffer curve. We have probably already passed this point. With the UK’s stock of debt continuing to increase, and in the absence of an election any time soon, it may ultimately by up the bond market to impose some fiscal discipline.

Tougher times for the dairy sector

Milk buyers announced significant price cuts in October/November against a backdrop of record UK milk production and rising global supplies.

Price cuts of up to 6ppl have been announced and depending on the buyer, producers can expect a reduced December milk price in the region of 30-40p.

The price cuts will have a significant impact on the profitability of the sector and a typical 250 cow herd producing 7,500l/cow could see income reduced by over £100k per annum if prices stay at current reduced prices.

With beef prices high many producers may take the opportunity to cull less efficient or underperforming cows in the herd as a way of addressing the problem.

Hopefully prices will rebound when commodity markets improve but, in the meantime, dairy producers will need to focus on managing cashflow and reviewing significant cost lines such as feed and fertiliser to see if any savings can be made or efficiency improved.

If profits fall compared to recent years, there may also be opportunities to claim a refund of tax already paid either through averaging  or loss carry back. Please speak to us if you think that this may apply to you.

June census results for Scottish agriculture

The 30^th October saw the publication of the June census by the Scottish Government. For those interested, a wealth of statistics can be found here.

Key highlights are as follows:-

• The total planted potato area was the highest since 2011 at 30,364ha, representing an increase of 1,279ha on 2024, equivalent to a 4.4% increase year on year. Growers would appear to be increasing their area, encouraged by decent returns over recent years.
• Sheep numbers remained relatively stable at 6.539m. Numbers were 2.2% below the average for the previous five years but saw a 1.1% increase year on year.
• Total cattle numbers at 1.654m continued their long-term decline, with numbers declining 0.9% year on year or 2.6% against the average for the previous years.
• Despite significant new investment in the sector, the total number of fowls for producing eggs declined by 0.7% year on year to 5.937m birds. The 2025 figure is also below the average number of 6.172m birds for the previous five years. We suspect that numbers will start to increase next year as new capital investment starts to be reflected in increasing bird numbers.
• The area of winter crops increased by 3.6% relative to the average for the previous five years, while the area of spring sown combinable crops declined by 0.5%, probably reflecting the favourable drilling conditions experienced in autumn 2024.

Celebrating success: Diversified Farm of the Year 2025

We’re delighted to congratulate Nikki and Ollie Lake of Thorabella Farm for winning “Diversified Farm of the Year” at The Scottish Agriculture Awards – an accolade we were proud to sponsor.

Thorabella exemplifies exactly the kind of innovation, diversity and entrepreneurial spirit the award aims to champion. From raising buffalo and Highland cows, to offering a farm shop, on‑site accommodation, a farm‑experience trail complete with exotic animals and even seasonal catering, the business has transformed from traditional farming into a dynamic, multi‑faceted rural enterprise.

Whether via agritourism, value‑added produce, renewables, or alternative income streams, diversification will remain a key pillar of future‑proofed rural businesses. Celebrating winners like Thorabella reinforces why we’re committed to supporting and sponsoring this award: because success stories like this show what is possible when ambition meets adaptability.

If you’re thinking about diversification, whether adding a farm shop, exploring on‑farm tourism, or branching into value‑added products or new enterprises, we’d be happy to talk through ideas with you and help explore whether it could be a viable path for your business.

Insights for a Changing Sector: 2026 Farming Conference

Our colleagues at Scrutton Bland, part of the wider Sumer Group alongside EQ, are hosting the 2026 Farming Conference on 28 January 2026 – and it’s completely virtual, meaning you can tune in from anywhere. This year’s theme, “Fields of Opportunities in a Climate of Change,” focuses on the big shifts shaping UK agriculture, from climate resilience and natural capital to energy efficiency, diversification and the evolving economics of running a modern farming business.

This event is a chance to hear directly from sector specialists and industry leaders, including keynote speaker Professor David Hughes, and take away practical ideas to support long-term planning. Whether you’re exploring new income streams, navigating regulatory change, or simply looking to strengthen the resilience of your business, the event offers clear, actionable insight.

Being part of the Sumer Group means we can connect you with expertise from across the network, and this conference is a great example of that collaboration in action. You can find full details and booking information on Eventbrite.

Signing off for 2026

As we wrap up the year, we want to thank all of our clients for your continued trust and support. Working alongside you is a privilege, and we’re excited to keep championing your businesses in 2026 and beyond.

Our offices will close at lunchtime on 24 December, reopening at 9am on 5 January, giving our team a well-earned chance to rest and recharge. If you need anything before the break, please do get in touch.

Wishing you a restful festive season and a prosperous, opportunity-filled New Year.