DAERA Minister expresses grave concern over the potential impact on Northern Ireland's farming community

Nearly half of all farms in Northern Ireland, accounting for 80% of farmed land, could be significantly impacted by changes to Inheritance Tax (IHT) reliefs, according to new analysis from the Department of Agriculture, Environment and Rural Affairs (DAERA).

The changes, announced in the UK Budget on October 30, 2024, restrict the Agricultural Property Relief (APR) and Business Property Relief (BPR) combined at 100% to a £1 million threshold starting April 6, 2026.

This potential change could hit the Northern Irish agricultural sector hard, particularly in light of updated estimates that have increased the average land value from £15,000 per acre to £21,000 per acre, effectively increasing the number of farms that may exceed the £1 million threshold.

Previously, it was estimated that around a third of farms might be affected, but the new analysis suggests that this number could rise to nearly half. These farms would represent around 80% of Northern Ireland's agricultural land.

DAERA Minister Andrew Muir has expressed grave concern over the potential impact on Northern Ireland's farming community. He warned that the changes could disproportionately affect the region’s agriculture sector, which is already under pressure.

He 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 added: "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 per cent. 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."

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Analysis previously undertaken by DAERA based on a land value of £15,000/acre in 2026 showed that about a third of farms would have a total land value exceeding £1m 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 £2m 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.”