The National Sheep Association (NSA) says yesterday’s Budget offers little reassurance for sheep farmers, despite the Chancellor signalling a shift toward raising taxation revenue from a broader range of taxpayers to reduce borrowing and invest in public services.

NSA Chief Executive Phil Stocker says: “After so much anticipation, the Budget turned out to be an uninspiring event for the farming sector. Disappointingly, opportunities to make fundamental changes to farming inheritance tax policy were missed.

“Defra’s budget has declined slightly in cash terms, but once inflation is factored in the reduction is far more significant. I fear this could lead to missed opportunities across farming and land management. Doubt also remains over whether the revised tax thresholds will do anything to improve spending confidence or support economic growth. It is difficult to see how this plan will materially reduce national debt or bolster public services.”

For farming specifically, the Budget contained few positive developments. A minor concession to agricultural inheritance tax (IHT) changes was confirmed, allowing the £1 million personal allowance to be transferred between spouses and civil partners where one individual died before 6th April 2026.

NSA considers this a welcome adjustment to an otherwise unwelcome set of reforms.

NSA Policy Manager Michael Priestley comments: “The land-owning segment of our industry faces real uncertainty around the impact of these IHT changes. This is a major concern for NSA. There is still time to improve the system before legislation is finalised, and NSA will continue working with industry partners to champion more practical alternatives.”

The increase in minimum wage also announced yesterday, NSA warns, will add further pressure to farm businesses. While many sheep farms rely on small teams or seasonal (lambing) staff, wage increases, when combined with rising input costs, risk further squeezing margins.

Mr Stocker adds: “Farmers recognise the need for fair pay, but repeated uplifts in the minimum wage without broader economic support for primary production will hit labour-intensive businesses hardest. This change, combined with reduced Defra resources, risks eroding the resilience of family farms.”

Overall, Defra’s resources are set to fall from £5 billion to £4.9 billion next year, reducing further to £4.7 billion in 2028/29. Internal allocations have yet to be set, but NSA expects departmental running costs to be trimmed.
Even if current spending on farm schemes is maintained, NSA is concerned that with the budget overspent and some schemes closing in 2025, the 2026 allocation may be too limited to allow meaningful expansion when the Sustainable Farming Incentive reopens.

A one-year extension will be available for Higher Level Countryside Stewardship agreements ending this year, and Environmental Land Management schemes continue to be reviewed in full.

In contrast to England, Scotland, Wales and Northern Ireland are each set to receive a 5–6% funding uplift. NSA will strongly advocate for agriculture to receive a fair share of these increases across all nations of the UK.