The Ripple Effect of the Budget on Farming
With the headline changes to APR and BPR dominating discussions, it’s easy to overlook how many rural businesses are grappling with more than just the topline impact of these proposed changes.
J ack Deal, Business Advisory Partner explores two further issues adding complexity across the sector. Firstly, in the shape of increases in the cost of Employer’s National Insurance (NI) and the National Living Wage (NLW), both effective from April 2025. And secondly, whilst the changes have already led to a number of generational transfers of land and property, what happens if there’s a marital breakdown now or in the future? How can you make sure your farm is protected from all angles? The impact of the NI and NLW changes By way of a re-cap, from April 2025 the rate of Employer’s National Insurance will increase from 13.8% to 15%, and the level of earnings at which Employer’s National Insurance is paid (per employee) will decrease from £9,100 to £5,000.
Meaning that for any full-time employees over the age of 21 on the National Minimum Wage, that’s an annual wage increase to be covered of over £1500, alongside a predicted rise in your employer NIC’s of £770*. We spoke with David Kemp of Kemp Herbs, a family business growing a range of herb and salad produce in South Norfolk. The business employs seasonal workers and has a higher number of employees than many neighbouring farms. David explained that they are budgeting for an additional £50k - £100k of cost for employing their people in 2025, compared to 2024.
‘The higher rate of National Insurance will hit us, but we’ll also be affected by the increase in the National Living Wage. Whilst we already pay our people above the rate of the National Living Wage, the increase raises the base line of what people expect to be paid, and we know we’ll have to pay more in order to compete for talent. Like most farmers, we don’t control the price of our product so we have no choice but to absorb this cost and look for cost savings elsewhere in our business’. David’s comments echo the feeling of many of our clients, particularly those that have diversified into the hospitality and retail sectors in recent years.
These sectors run at tight margins and employees are essential.
And whilst some businesses will be able to pass on increases in employment costs, some will be considering their models and hiring policies in light of them.
8 | SCRUTTON BLAND | AGRICULTURE AND FARMING
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