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Budget Impact on Farm Diversification, Planning & Business Rates

12 December 2025 16:11

The latest Budget has important implications for farmers who are exploring or expanding their diversification projects.


Changes to planning policy and business-rate thresholds will affect the viability of new ventures like farm parks, holiday lets, farm shops and equestrian enterprises.

 

  1. Planning: Greater Flexibility but Higher Scrutiny for Tourism Uses

The Budget aligns with the Government’s broader aim to stimulate rural economic growth. Key points include:

  • Continued support for rural enterprise, including more flexible planning rules and wider use of Permitted Development Rights for converting agricultural buildings.
  • Potential for increased environmental and traffic scrutiny, where diversification involves visitor accommodation or high footfall like glamping.

Impact:
Lower planning barriers make small-scale projects easier to start, but tourism-based ventures could face more assessment requirements.

 

  1. Business Rates: A Critical Cost for Diversified Farms

Agricultural buildings remain exempt, but once activities change into retail, hospitality or leisure they could become liable for business rates. The Budget confirms the continuous use of two RHL (Retail, Hospitality & Leisure) business-rate multipliers, depending on the property’s Rateable Value (RV):-

 

  • Lower Multiplier – RV up to £51,000

Designed to support small enterprises such as farm shops, cafés, small holiday lets and start-up visitor services. This lower rate could help keep overheads manageable. Multiplier rate will be 38.2p.

 

  • Standard Multiplier – RV £51,001 to £499,999

Applies to larger diversified ventures such as multi-unit holiday accommodation, larger retail outlets or visitor attractions. The higher multiplier significantly increases the annual rates bill. Multiplier rate will be 43.0p.

 

Impact:
The lower multiplier encourages small-scale, low-impact diversification, while the higher multiplier can make scaling up a lot more costly. Businesses close to the £51k threshold need to model rate implications cautiously.

 

  1. Implications for Diversification Strategy
  • Small projects benefit most, particularly those that stay within the lower multiplier band.
  • Medium-sized expansions become less attractive, as rising rateable values push businesses into the higher rate bracket.
  • Long-term financial planning is essential, especially where projects could trigger business-rate liability for the first time.

 

Summary

The Budget supports rural diversification but reinforces the importance of careful planning and financial forecasting. For many farms, the most viable path will be multiple small ventures rather than a single large tourism or retail development. Understanding business-rate thresholds early in the design stage will be key to sustainable growth.

 

For expert help and advice on planning and business rates contact:-

Barry Davies BSc (Agric), MRICS, FAAV, IRRV
Davies & Co., Chartered Surveyors
📞 01536 524808
📧 info@daviesandco.co.uk
🌐 www.daviesandco.co.uk