Debate contribution: Inheritance Tax Changes: Impact on Family Farms

Debate contribution by Mr Andrew Muir on 11 February 2025.

MLA

Mr Andrew Muir

Party at the time

Alliance Party

Date

11 February 2025

Type

Debate contribution (made as a minister)

Business

Private Members' Business

Heading

Inheritance Tax Changes: Impact on Family Farms

Assembly identifier

Official Report component 4793762

Read the official Assembly record

Text

Thank you very much, Madam Principal Deputy Speaker. I thank the Members for tabling the motion. This is primarily a reserved matter on taxation, but I am happy to respond, and I will respond to the motion as tabled. As Members will know, the issue raised in the motion has caused and continues to cause significant concern and uncertainty, not only for our local farming community but for me as Minister of Agriculture, Environment and Rural Affairs. Last October, I spoke at the UFU rally at Balmoral against the introduction of the changes to inheritance tax. I have also attended many meetings with Ministers on the issue. The support that the farming community has received across all sections of our community underscores the concern about the issue that is out there and highlights the fact that there is an understanding across society of the important role that our farmers play in all our lives. I said in the Assembly in November that I was disappointed by the lack of engagement with devolved Governments in advance of the Budget announcements. As I stand here today, I continue to be disappointed and have been left frustrated by the UK Government's lack of willingness to engage on the issue with devolved Governments and farming representatives. The far-reaching impact of the policy changes is much more significant than the Treasury estimate, and it is critical that Treasury listen to the concerns raised by devolved Governments and farming unions. Land values bear no resemblance to the income-earning potential of land, and they are never realised where land is passed down through the generations of farming families and continuously farmed. Due to the policy change, however, those values could give rise to large tax bills. As I said, I have met Ministers on the issue. In October, I met the Secretary of State for Northern Ireland to emphasise concerns about the impact of the changes on our family farms and farm succession planning. I have also, on numerous occasions, expressed those concerns to other devolved Agriculture Ministers and to the Minister of State at DEFRA, Daniel Zeichner, who, in January 2025, responded to a letter from me on the issue. I have also raised issues with Steve Reed, the EFRA Secretary of State. I will address specific points in the motion. As Members will be aware, and as is referenced in the motion, in December 2024, my Department undertook further analysis of the impact of inheritance tax changes on local farms. That built on the original analysis undertaken in November 2024, and along with land values, took into account buildings, residential property, livestock and machinery. The analysis found that just under half of all farms in Northern Ireland have agricultural and business property values that exceed £1 million. The analysis assumed that, in 2026, agricultural land in Northern Ireland will have an average valuation of £21,000 per acre. That value is not overinflated. It has been calculated based on information from the 'Irish Farmers Journal' survey and the DAERA farm business survey. Last week, the 'Irish Farmers Journal' confirmed that the average Northern Ireland agricultural land price had hit a record high of £14,736 per acre, which is up 6·8% or £942 per acre year-on-year. Furthermore, the farms that are likely to be impacted on by the policy change account for about 80% of the total land farmed in Northern Ireland. Those staggering statistics highlight why there is such overwhelming fear in our farming sector. As we have repeatedly heard from farmers across the UK since October 2024, the limitations on agricultural property relief and business property relief will impact not only on the wealthy investors in land, at whom the UK Government say the policy change is aimed, but on vast numbers of family farms, because the policy change makes no distinction between the two. Just this month, as Members have mentioned, the Northern Ireland Rural Valuers' Association, in conjunction with the Central Association of Agricultural Valuers, published a report that corroborates the point highlighted by my Department that the policy change has the potential to have a disproportionate impact in Northern Ireland. Owing to our distinctive farm structure of smaller farms that are more likely to be owner-occupied and farms with higher land values than in many other parts of the UK, our farmers are much more vulnerable to the UK Government's inheritance tax changes, which will come into force in April 2026. I plan to write to the EFRA Secretary of State to highlight the findings of that updated analysis and re-emphasise to him my concerns about the inadequacy of Treasury figures in measuring the impact of the policy change on our farming community. I urge the UK Government, as part of a rethink of the policy, to look at how inheritance tax operates in other European countries, particularly Germany, where agricultural land obtains up to 100% relief if it is retained in agricultural use and not sold by the inheritor within a set period of seven years. The introduction of such a provision in the UK, whereby inheritance tax would not be payable on inherited land provided that it remained in agricultural use and was not sold within seven years, would mean that family farms could continue to be passed down through generations without incurring a large inheritance tax liability. That is crucial to the future of our agri-food sector.

At the same time, it would remove the possibility of investors from outside farming buying agricultural land in the knowledge that, on death, it could be sold free of inheritance tax and capital gains tax and therefore discourage that type of activity.

The motion states that:

"these changes threaten the viability of family farms that contribute significantly to our agricultural output".

I want to be clear that this is not scare tactics. On the basis of my Department's analysis and my engagement with farmers, farming unions and land value experts, that outcome is a real possibility. I use the opportunity, once again, to urge the UK Government before their spring statement to reconsider the policy change, given the disproportionate impact on family farms and the potential repercussions for our rural communities and food supply chain. I urge the Assembly to support the motion.

1,041 words. Text as published by the Northern Ireland Assembly.

Assessment

Not flagged

Jev’s structured answers

Assessed 21 October 2026 at 12:01 UTC by jev-1.13.0 (requested as typesafe/jev) under rubric 2026.10-r9, methodology 1.9.

Disagree with this assessment?

Classifications can be challenged. A person reads every challenge, and any change is recorded publicly above with its reason.

Challenge this classification