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An independent review examining farm profitability has revealed that many farmers feel “bewildered and frightened” due to proposed changes to inheritance tax, leading to concerns about the future viability of their businesses. The government-commissioned report, which was released on Thursday, includes 57 recommendations aimed at enhancing productivity, investment, and resilience within the agricultural sector.
Baroness Minette Batters, who authored the review and is a former president of the National Farmers’ Union (NFU), emphasized that no single solution will make farms in England profitable. The environment secretary, Emma Reynolds, responded by highlighting plans to strengthen collaboration between the government and the farming and food industries. This cooperation will be facilitated through a newly formed farming and food partnership board, consisting of senior industry and government leaders, tasked with fostering growth, productivity, and long-term profitability across the sector.
Baroness Batters called for a “new deal for profitable farming” that better accounts for the real costs of food production and environmental stewardship. Although the report did not thoroughly explore the government’s inheritance tax proposals set to affect farm businesses valued over £1 million—applying a 20% tax rate from April 2026—Batters noted that this issue was consistently cited as the primary concern by members of the farming community during her review. The sector has also been grappling with rising costs, increasingly severe weather conditions, such as this year’s intense drought, and uncertainty surrounding the closure of applications to the sustainable farming incentive scheme.
The report noted that costs are expected to be 30% higher in 2026 compared to 2020, while the farming budget in England, standing at £2.4 billion, has remained largely unchanged since 2007. Despite these financial pressures, farmers are being asked to meet more stringent environmental standards, often with less funding and unclear future support. Batters stressed that farmers are not seeking state handouts but rather the ability to operate thriving, profitable businesses by earning a fair return on their produce.
The NFU described the report as comprehensive and acknowledged the need for reform. NFU President Tom Bradshaw highlighted fairness in the supply chain, planning reforms, and boosting exports as top priorities. He also underscored the urgency of providing clarity on the future of the sustainable farming incentive and addressing the inheritance tax changes. Similarly, Gavin Lane, president of the Country Land and Business Association, representing rural businesses and landowners, welcomed the review but urged prompt action. Lane noted that many farm businesses are barely breaking even or operating at a loss and will soon face significant inheritance tax bills that could far exceed their annual profits.
In response, the government declared ongoing efforts to reform planning rules to prioritize food production, expedite approvals for on-farm reservoirs, polytunnels, and farm shops, and facilitate investment by farmers. Additionally, initiatives to enhance supply chain fairness, remove barriers to private financing, and support exports and the opening of new markets are underway, according to a spokesperson for the Department for Environment, Food and Rural Affairs (Defra)
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