The Department of Agriculture, Environment and Rural Affairs (DAERA) has said that around half of all farms in Northern Ireland, accounting for 80% of farmed land, could be impacted by the inheritance tax changes announced as part of the UK budget in October.
The department has undertaken a deeper analysis into the impacts of the tax changes, taking into account residential property, farm buildings, machinery and livestock as well as land.
This increased the average land value estimations from £15,000/acre to £21,000/acre, taking the number of farms potentially impacted from a third to around half.
Inheritance tax
As part of the UK budget on 30 October 2024, it was announced that Agricultural Property Relief (APR) and Business Property Relief (BPR) combined at 100% would be restricted to £1 million from April 6, 2026.
Analysis previously undertaken by DAERA based on a land value of £15,000/ac in 2026 showed that around a third of farms would have a total land value exceeding £1 million and therefore would be impacted.
These farms account for the majority of output of the Northern Ireland agricultural sector including around 70% of farmed land, 86% of dairy cows and 57% of beef cows.
More comprehensive analysis has now been produced which also takes into account residential property, farm buildings, machinery and livestock as well as land. This increases the average land value estimation for 2026 to £21,000/ac.
With a £1 million limit on Agricultural Property Relief (APR) and Business Property Relief (BPR) combined at 100%, around half of all farms in Northern Ireland, accounting for 80% of the area farmed will exceed this limit and will be impacted by the budget change.
Using a £2 million limit – which some, but not all, farms may obtain if they are able to divide farm assets between partners – the department said that a quarter of farms would be impacted but these farms still account for over half of the area farmed in Northern Ireland.
Minister for Agriculture, Environment and Rural Affairs, Andrew Muir, said that the initial analysis undertaken by his department had already “painted a worrying picture”.
“This deeper study has truly revealed the stark reality of how many hard-working farmers could be impacted by the inheritance tax changes.
“I stand firmly with the agriculture sector in calling for these damaging changes to be reversed.
“Northern Ireland will be disproportionately impacted due to the make-up of our agri-sector and it cannot continue,” he said.
Impact
Minister Muir said that the latest DAERA analysis is at odds with the [UK] Treasury figures presented which relate to 2021/22 claims for APR and BPR and are almost certainly a major underestimation of the impact.
“It is important to remember that these claims are from a period when the value of agricultural property and business property made no difference to inheritance tax liability as there was unlimited relief at 100%.
“I have serious concerns with their use to measure the impact of the changes announced in the budget.
“The context will be very different from April 6, 2026 with much more attention being given to agricultural and business property values,” he said.
Minister Muir has again urged the UK government to reconsider the planned tax changes given the disproportionate impact on family farms, particularly in Northern Ireland.
“The ability to pass farms down through generations of farming families is crucial to securing the future of our agri-food sector.
“I will continue to do everything I can, working with stakeholders and my ministerial colleagues to make representations to UK government ministers,” he said.
The inheritance tax changes have led to widespread anger and concern among farmers with around 6,000 attending an Ulster Farmers’ Union (UFU) rally on the issue last month.
Farmers are also planning to hold another tractor protest at Westminster in London today (Wednesday, December 11).
