As part of the 2024 Spring Budget, the government has finally published its response to last year's consultation on the potential expansion of Agricultural Property Relief (APR) for land used for environmental purposes. The consultation was carried out in response to concerns from land managers that once land was taken out of agricultural production and given over to environmental delivery it would no longer qualify for 100% tax relief.

"The government has announced that from 6 April 2025 land managed under an environmental agreement with, or on behalf of, the UK government, Devolved Administrations, public bodies, local authorities, or approved responsible bodies will be eligible for APR," says Jason Beedell, Rural Research Director for Strutt & Parker.

"This is good news and is something that Strutt & Parker, working with the Energy & Climate Intelligence Unit (ECIU) think tank, submitted evidence to support last year. It is a move which should give farmers and landowners clarity and confidence that they can enter into long-term habitat creation, nature recovery, climate mitigation and flood management schemes without being unfairly penalised. It will give them greater flexibility to do more for the environment – in line with the Government's own targets – at the same time as accessing new sources of revenue.

"We await further detail on what agreements are included and will also follow the working group that will be set up to identify solutions on the tax treatment of ecosystem service markets with great interest.

"Much of the rest of the Budget looks to be a swings and roundabouts situation. There is a section in the Budget documents on farming productivity which restates the recent government announcement on £427m of grants being available to farmers.

"However, this spending on improving productivity should be tempered by planned cuts in Defra's spending of 12.5% or £0.6m between 2023/24 and 2024/25, and even bigger cuts to the Levelling Up, Housing and Communities (DLUHC) budget.

"The scrapping of tax reliefs for furnished holiday lets will also be a blow to those rural businesses which have diversified."