Northern Ireland MPs and peers call for rethink of agricultural inheritance tax

Northern Ireland’s MPs and peers have united in a plea to the Government to rethink planned changes to inheritance tax for farmers.

In a letter to Chancellor Rachel Reeves, DUP MP Carla Lockhart warned it could threaten the generational transfer of farms, disrupt rural communities and undermine the long-term security of the agricultural sector.

The Stormont Department of Agriculture, Environment and Rural Affairs has estimated that around a third of farms in Northern Ireland will be affected.

It comes as farmers plan to take part in an Ulster Farmers’ Union rally in Lisburn, Co Antrim, on Monday evening.

A large-scale protest is expected to take place at Whitehall on Tuesday.

Ms Lockhart has urged the Chancellor to reconsider her plans to axe historic agricultural property relief (APR) on inheritance tax announced in the recent Budget.

From April 2026, APR will only apply to the first £1 million of the estate, with anything over that value taxed at 20%.

The letter, which was circulated to the Treasury, Prime Minister Sir Keir Starmer and Defra minister Daniel Zeichner, has been countersigned by all sitting Northern Ireland MPs and members of the House of Lords.

Ms Lockhart described a “strong united message on this issue”.

“Agriculture isn’t just a cornerstone of Northern Ireland’s economy, it is a fundamental part of local communities and rural life,” she said.

“With more than 26,000 farms, the agri-food sector supports tens of thousands of families across the region, providing vital economic, social and cultural contributions.

Unlike other types of businesses, farming is asset-rich but often cash-poor, making inheritance tax liabilities particularly difficult to meet without significant restructuring, borrowing, or asset disposal

“The removal of Agricultural Property Relief will place a substantial and unfair financial burden on family farms, jeopardise their ability to pass on these assets to future generations and risk the sustainability of family-owned farming operations.”

Ms Lockhart said the plan risks exacerbating existing pressures already faced by the agricultural sector, including rising operational costs, challenges from changing trade conditions and the uncertainties associated with climate policies.

She said at least a third of all farms in Northern Ireland are set to be affected, and 75% of dairy farms.

“Whilst almost £14,000 per acre is reported as the average price, land values in Northern Ireland vary massively, depending on location and sector, but are in the main more expensive than elsewhere in the United Kingdom,” Ms Lockhart wrote in her letter to the Chancellor.

“Unlike other types of businesses, farming is asset-rich but often cash-poor, making inheritance tax liabilities particularly difficult to meet without significant restructuring, borrowing, or asset disposal, potentially leading to fragmentation or loss of productive land.

“We recognise and support the need for a fair tax system, but we strongly believe that removing APR will inadvertently threaten the generational transfer of farms, disrupt rural communities and undermine the long-term security of our agricultural sector.

“We strongly urge the government to reconsider this decision and to preserve APR for agricultural properties to ensure that the next generation can continue to work and thrive in this essential industry.

“We would welcome the opportunity to engage further with you on this matter to discuss possible approaches that can support both the government’s fiscal objectives and the viability of the agricultural sector in Northern Ireland.”

A Government spokesperson said: “The Government’s commitment to our farmers remains steadfast. It’s why we have committed £5 billion to the farming budget over two years – more money than ever for sustainable food production.

“We understand concerns about changes to Agricultural Property Relief but the majority of those claiming relief will not be affected by these changes. Around 500 claims each year will be impacted and farm-owning couples can pass on up to £3 million without paying any inheritance tax.

“This is a fair and balanced approach that protects the family farm while also fixing the public services that we all rely on.”