Business and Policy November 2026 – Autumn Budget 2026

Breathing space, but little to stimulate agricultural growth 

The Autumn Budget delivered by Chancellor John Healey on 28 October was presented as providing fiscal stability and breathing space from rising costs. For Scottish Agriculture, it wasn’t as impactful as initially hoped with a range of smaller measures provided. Tight margins, uncertain investment and succession continue to be concerns. 

The Office for Budget Responsibility (OBR) forecasts GDP growth of 1.2% in 2026, falling to 1.0% in 2027. Inflation is expected to average 3.1% and 3.4% respectively, returning towards 2% in 2028. Higher energy prices following the Middle East conflict are a major factor. The OBR’s market-based assumptions also put average Bank Rate at 4.0% across 2026–27, up from 3.4% in its March forecast, suggesting borrowing costs may remain higher for longer. The Government still meets its fiscal rules, with £15bn headroom in 2029–30. 

Further clarity on devolved taxation and agricultural funding will come from the Scottish Budget on 3 December. 

Key measures affecting agriculture 

Fuel and fertiliser 

• The temporary 3.7p/litre reduction in red diesel duty and the 5p road fuel duty cut are extended until 1 July 2027. 

• Existing import tariffs on specified fertilisers will be suspended from 26 November 2026 until December 2027. This may reduce costs, although the introduction of the Carbon Border Adjustment Mechanism (CBAM) from January 2027 could offset some savings. 

 

Capital allowances and investment 

• The £1m Annual Investment Allowance and company full expensing remain unchanged. 

• The First-Year Allowance for qualifying new plant and machinery increases from 40% to 50% from January 2027, but the main Writing-Down Allowance falls from 14% to 12% from April 2027. Many farms investing within the AIA limit will see little immediate change. 

 

Taxation, succession and business disposals 

• No further change to APR/BPR: the £2.5m individual allowance remains, with 50% relief above it (an effective 20% IHT rate) 

• The Business Asset Disposal Relief lifetime limit falls from £1m to £500,000 from April 2027, increasing potential CGT costs on qualifying business disposals. 

• Savings income tax rises by a further two percentage points from April 2027, taking rates to 24%, 44% and 49%. Property income rates will also rise outside Scotland; Scottish treatment awaits the devolved Budget. 

• From April 2029, Self Assessment taxpayers making payments on account will move to smaller, more frequent payments throughout the year. 

 

Employment costs 

• From April 2027, the National Living Wage rises by 3.9% to £13.21 for workers aged 21 and over, while the National Minimum Wage for 18–20-year-olds increases by 3.9% to £11.27. The increase in costs for labour-should be considered alongside Scotland’s agricultural wage requirements. 

 

Overall assessment 

This was a Budget of modest measures rather than providing a wider growth strategy, with a welcome short-term fuel and fertiliser relief. Higher labour and finance costs and lower tax reliefs provide the challenge.  

The emphasis remains on reviewing succession arrangements, investment decisions, business structure and cashflow to protect profitability and future resilience.  

Andrew Coalter, andrew.coalter@sac.co.uk