GSC GraysGSC Grays

Contact our offices

A difficult 2025, are there any flickers of hope for 2026?

As we come to the end of another year, it is clear that 2025 has been yet another difficult period for our industry.

There was little cause for cheer in the late November Budget. While some measures, such as the £1 million relief transfer between spouses, still lack detail and clarity, others have landed much as I feared they might. In early 2024, prior to the General Election, I speculated that a change of government could bring some form of investment income surcharge, and that prediction has now been realised.

While the current 2% surcharge is uncomfortable, it should be manageable. The greater concern lies in historical precedent: when its predecessor was scrapped by the Conservative government in 1985, it stood at 15%!

There have, however, been glimmers of resilience in the livestock sectors. Sheep and beef prices have held firm throughout 2025 and there is hope this can continue over the next 12 months. That said, recent cuts in milk prices and continued low cereal prices cast a long shadow and overall the agricultural sector looks set to remain under pressure.

Farmers are well accustomed to the unpredictability of the weather, but they must now also contend with indecisive, delayed and often unexplained legislative and tax changes. The December 23rd announcement that the aforementioned £1 million relief is to rise to £2.5 million is a perfect example of such practice, whilst welcome, why then and where is the detail? Without decisive government action on the future of both the Sustainable Farming Incentive and Countryside Stewardship, we are likely to see more land coming to the market, as marginal arable farmers cannot continue to grow cereals at a loss.

The so-called “Mansion Tax” announced in the November Budget is likely to have a limited direct impact in our region. However, its introduction has raised wider concerns that, much like the investment income surcharge, it could represent the thin end of the wedge and signal a wealth tax by another name.

In this context, the 2% tax surcharge on dividends, savings and property income will place additional pressure on diversified farming businesses and larger estates that rely on these income streams. This is difficult to reconcile with the repeated message that farmers should be planning for succession, when the very investments intended to support long-term stability are now subject to additional income tax charges.

Set against the absence of new capital allowances or incentives to encourage growth, investment and innovation, the Chancellor’s message is clear: businesses are expected to take greater responsibility for their own resilience.

As a result, farmers and estate owners must focus more than ever on operating as efficiently and profitably as possible. Reviewing business structures, maintaining tight control of costs and identifying opportunities to maximise returns will be critical. Equally important is putting a clear strategy in place to manage and mitigate future IHT liabilities, ensuring assets can be protected and passed on securely to the next generation.

A final word of caution for all employers: significant changes to employment legislation are scheduled to take effect on 1 January 2026. These will impact all businesses and introduce a host of new requirements. I urge everyone to review employee contracts, seek advice and take action—this already complex area presents even more pitfalls for the unprepared.

There is no doubt that 2026 will bring challenges, but challenge also brings opportunity. Clear, timely guidance and ensuring you have the right advice for your business, will be key to navigating the changes and pressures ahead.

Article by

David Gray
FRICS DL
Chairman

Get to know David

Latest News