The reaction of farmers to the change in their relief from inheritance tax (IHT) was perhaps the biggest story of Rachel Reeves’s first Budget as Chancellor. While many protested in Westminster, several more will be in touch with their accountant or tax adviser about its consequences and how to adjust their plans for the future. ICAS members in practice will have a crucial role in supporting their clients as they navigate the various changes – which go beyond the headline-grabbing change in IHT status.

Changes for employers

Many farming businesses will see an impact from the increases in the minimum hourly rates to be paid to employees. From April 2025, the national living wage for over-21s will increase to £12.21 per hour and the national minimum wage for 18–20-year-olds to £10.00 per hour. However, there could also be further changes to come from the Scottish Agricultural Wages Board and equivalent bodies throughout the UK to the minimum rates for agricultural workers.

Additional salary costs for workers will have a direct impact on employer pension contributions for employees and earnings subject to employer’s Class 1 national insurance (NICs).

As well as that, the Chancellor announced that the employer’s Class 1 NICs threshold will be reduced from £9,100 to £5,000 per year from April 2025 and the rate will rise from 13.8% to 15%. While the increase in employment allowance from £5,000 to £10,500 and the withdrawal of its £100,000 threshold will mean 865,000 employers (according to government figures) will pay no employer’s Class 1 NICs in future, the changes will have a significant impact on those employers having to bear the additional costs, particularly for employers of part-time employees, whose earnings might have previously been below the NICs threshold.

Changes to inheritance tax reliefs

Farmers looking to pass the family farm to the next generation will be concerned by the freezing of inheritance tax bands for a further two years to April 2030, as well as the changes to agricultural property relief (APR) and business property relief (BPR) from April 2026.

From 6 April 2026, the existing 100% rates of relief for APR and BPR will only continue for the first £1m of value of combined agricultural and business assets, with a 50% rate thereafter. Time will tell whether this influences decisions on when to pass on the family business to the next generation, but the reduced availability of these reliefs may lessen the incentive to hold on to assets until death. But there will be other tax issues to consider before reaching a decision on this.

Although the changes will apply from April 2026, anti-forestalling rules mean that lifetime transfers on or after 30 October 2024 will also be affected if the donor dies on or after 6 April 2026, if this is less than seven years after the date of the gift.

Changes to capital gains tax

For those farmers looking to sell their farm, the announcements on capital gains tax (CGT) will impact their post-tax cashflow on sale. The lifetime limit for gains covered by business asset disposal relief (BADR) was not increased (despite it applying on gains from 2008), and the tax rate for gains covered by BADR will also increase from the current 10% to 14% in April 2025 and 18% in April 2026.

Gains not covered by BADR will be subject to an immediate increase on Budget Day to 18% (for gains within the UK basic rate income tax band) and/or 24% (on any remaining gains).

The Finance Bill includes anti-forestalling rules to override the normal rules for the timing of disposals, where those disposals complete after a change in rate. Genuine commercial transactions should be unaffected by these rules.

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PGMOL case rumbles on

Justine Riccomini, Head of Tax (Employment and Devolved Taxes), on the Supreme Court’s long-delayed decision on HMRC’s case against football referees

The Supreme Court issued its decision on HMRC v Professional Game Match Officials Ltd (PGMOL) in September – 15 months after the case was heard. It could be that the Supreme Court was snowed under with decision-making duties, but I prefer to believe the delay (normally it takes up to nine months to issue a decision) was down to the judiciary taking care to give the best decision they could in the circumstances.

There have been so many employment status case decisions over the past 20-plus years and employment tax advisers were keen for the court to set a precedent for how employers and advisers should structure their approach in such cases, in the hope they require less time in the courtroom.

What was this case about?

Around 60 match officials, who are technically classified as amateurs due to refereeing being a “hobby” role for most of them, contracted with PGMO to referee English football and Champions League matches. The officials would agree to work on a particular match in return for a fee, expenses and performance-related bonuses.

After conducting a review, HMRC assessed two tax years (2014/15 and 2015/16) and concluded they were employees working under an overarching contract of employment. PGMOL appealed, arguing that each of the agreements was a discrete, standalone contract between an engager and a self-employed individual.

Then the following sequence of court appearances ensued:

First Tier Tribunal	FTT found that insufficient mutuality of obligations and control existed.	Found in favour of PGMOL. HMRC appealed.
Upper Tribunal	UT held FTT had erred on the control point but concluded insufficient mutuality existed	Dismissed HMRC’s appeal. HMRC appealed.
Court of Appeal	CA agreed appeal could be heard – on the basis of the mutuality point.	Case remitted back to FTT to reconsider both aspects of its decision (control and MOO). PGMOL appealed to SC on both issues applying to discrete contracts.
Supreme Court	SC made recommendations to the FTT and remitted it back there for a decision to be remade.	SC found in favour of HMRC on the first two aspects of the Ready Mixed Concrete case tests but remitted the case back to FTT for it to decide on the third.

What did the Supreme Court decide?

The Supreme Court did not make a final decision on this case – which many tax professionals were expecting them to do. It held that the so-called “irreducible minimum” requirements of mutuality of obligation and control deemed necessary to establish a contract of employment between the officials and PGMOL existed – crucially, in relation to each contract, on a match-by-match basis.

It quashed the Court of Appeal’s decision in relation to mutuality of obligations, opining that mutuality can in fact apply to each discrete contract – thus concluding it was unnecessary to examine any overarching contracts between the parties. The third test back to the FTT to decide whether the individual contracts were in fact contracts of employment.

Crucially, the Supreme Court included an opinion that when considering employment status, that consideration needs to take into account all of the fact pattern and not just part of it. Mutuality alone is not a sufficient test to prove employment, nor is control.

What happens now?

Once again, we find ourselves waiting for the FTT to conclude its deliberations in relation to this case. Meanwhile, now is the time for a long-overdue review of employment status. We hope the new government will use the opportunity, because the unacceptable levels of complexity are currently proving a barrier to business, the wider economy and labour market forces.