New analysis shows half of NI farms potentially impacted by inheritance tax changes
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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 of Agriculture, Environment and Rural Affairs (DAERA) 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.
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 6 April 2026.
Speaking of this comprehensive analysis, DAERA Minister Andrew Muir said: “The initial analysis undertaken by my department painted a worrying picture, but 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 makeup of our agri-sector and it cannot continue.”
The Minister continued:“My Department’s analysis is at odds with the Treasury figures presented which relate to 2021/22 claims for APR and BPR and 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 6 April 2026 with much more attention being given to agricultural and business property values.”
Analysis previously undertaken by DAERA based on a land value of £15,000/acre in 2026 showed that around 1/3 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/acre. With a £1 million limit on APR and 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), a quarter of farms would be impacted but these farms still account for over half of the area farmed in Northern Ireland.
The Minister concluded: “I again urge the UK Government to turn back and 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.”
The full analysis can be found on the DAERA website.
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