Reaction to inheritance tax plan change

Government proposals to tax inherited farmland have been watered down, with the planned threshold increasing from £1m to £2.5m.

The climbdown follows months of protests by farmers and concern from some Labour backbenchers.

In an announcement put out after MPs had left Parliament for the Christmas recess, Environment Secretary Emma Reynolds said: “We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms.”

William Irvine, president of the Ulster Farmers Union, said he “never gave up hope that there would be some movement or some ease from the government”.

At last year’s Budget, ministers said they would start imposing a 20% tax on inherited agricultural assets worth more than £1m from April 2026, ending the 100% tax relief that had been in place since the 1980s.

Reynolds said: “It’s only right that larger estates contribute more, while we back the farms and trading businesses that are the backbone of Britain’s rural communities”.

Mr Irvine welcomed the news as “it eases pressure on family farms” but he said that “it is not where we want to see the final position to be”.

He told BBC News NI that “farm families are in a better place today than they were this time yesterday as a result of this announcement”.

He said that whilst there had not been “time to crunch the numbers yet”, he estimated that “between 80 and 90% of Northern Ireland farms should be significantly, if not totally, covered” by the new threshold.

The move is a “step in the right direction,” he said.

It “gives people the confidence to invest in their farms for the future” and “gives younger generations the confidence to enter the industry,” he added.

Whilst £5m is a lot of money, Mr Irvine told BBC News NI that in farming terms, it is a “very average farm” and that there are many farm families with £5m holdings “struggling to get living wage out of it”.

He said “the old adage of asset rich and cash poor absolutely applies to farming” as land, stock and farming kit is extremely valuable.

Mr Irvine said the last 14 months had been very stressful and “could absolutely have been avoided” if the government had listened and talked to the agricultural industry at an earlier stage.

Going forward, Mr Irvine said he would like to see “a sensible discussion” about how inheritance tax should be handled long term.

The Chair of Stormont’s Agriculture, Environment and Rural Affairs committee Robbie Butler welcomed the climb down but said it needs to be “removed totally”.

“This has been a long held, deep-seeded concern which was really impacting the mental health of farm families right across Northern Ireland,” he said.

“So those who have heard the news are welcoming it but I think their call to us is that we need to keep on in this vein and see its removal totally.”

Colin Smith, chief executive of The Livestock and Meat Commission, said this was “welcome news to farming families across Northern Ireland”.

“The anguish that this policy has created within the farming community has been widely publicised,” he added.

“Family farms are the part of the fabric of NI, making significant contributions to the economy, environment and society. It is imperative that they are safeguarded and allowed to prosper for generations to come.”

Mr Smith added that it was “unfortunate” that the tax will still exist but that raising the threshold “is a positive step which will reduce the burden on farm families”.