The tax barrier to farmers and landowners engaging in Environmental Land Management schemes (ELMS) has been removed in the Spring Budget.
The government has published its response to the consultation on the potential expansion of Agricultural Property Relief (APR) for land used for environmental purposes.
Last year's consultation was in response to concerns from farmers that once land was taken out of food production and given over to environmental delivery it would no longer qualify for 100% tax relief.
But as part of the Spring Budget, the government announced that from April 2025, land managed under an environmental agreement will be eligible for APR.
Jason Beedell, rural research director for Strutt & Parker, said this would be good news for farmers and landowners.
"[it] is something that Strutt & Parker, working with the Energy & Climate Intelligence Unit (ECIU) think tank, submitted evidence to support last year," he said.
"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."
The government also looked at farming productivity in the Budget, which restates the recent announcement on £427m of grants being available to farmers.
But Mr Beedell said: “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."
