Thousands of NI farms may still face inheritance tax

More than 4,500 farms in Northern Ireland are still likely to be liable for inheritance tax, despite the threshold being raised to £2.5m.

But fresh analysis by the Department of Agriculture, Environment and Rural Affairs (Daera) warns that any increase in land values could "significantly" add to that number.

And although allowances are now transferable between spouses, almost a third of farmers in Northern Ireland are not married or do not have a civil partner, including 17% of larger farms – which will be those impacted by inheritance tax.

The Daera committee is to write to the minister to reaffirm its opposition to the removal of 100% inheritance tax relief for farms.

Agricultural land values in Northern Ireland have hit record highs in recent years.

That meant on land value alone, around half of all farmers in Northern Ireland were likely to face an inheritance tax bill under the original proposal of a £1m threshold.

The latest analysis presumes an average value per acre of £21,000.

On that basis, the figures from the department suggest farms with 48 hectares (118.6 acres) or more of land would exceed the £2.5m threshold and potentially be impacted by inheritance tax.

But the committee chair, Ulster Unionist MLA Robbie Butler, told members land prices in Northern Ireland may already be higher than assumed for the analysis.

"If that is the case, that obviously skews the figure – what are they talking about, 17.5% of farms and 48% of land? It's going to be bigger than that.

"And as machinery prices, animal prices, all of those things rise, this is not a fixed item."

The chancellor announced in November 2025 that allowances would be able to be transferred to limit exposure to a large inheritance bill.

That remains the case with the increased threshold.

Where allowances can be transferred between spouses or civil partners, relief of up to £5m may be accumulated.

At that level, the new analysis suggests around 5% of farms in Northern Ireland would still have agricultural and business property values above the threshold.

The Sinn Féin deputy chair of the committee, Declan McAleer, said tax planning for farmers remained challenging, particularly for elderly farmers.

"There's also an issue where there's no spouse or civil partners involved as well for passing on.

"And also the £21,000 put down as the value per acre - land values fluctuate, so again that adds more uncertainty going forward."

Under the original £1m threshold, it was estimated half of all farms in Northern Ireland would be impacted by the tax change, equating to 80% of total land farmed.

The increase to £2.5m means 4,517 farms (17.5%) are likely to be affected, equating to 48.8% of farmed land.

That number would include almost two-thirds of cattle and sheep farms, while dairy farms account for a quarter.

The new threshold will be introduced from April 2026.