County Fermanagh countryside. Picture: Cliff Donaldson
Commodity Watch written by policy officer, Daniel Toft
In the face of the UK Government’s proposed changes to agricultural property relief, the UFU has consistently opposed them and argued that they do not reflect the realities of modern farming. That is why we welcome the UK Government’s recent decision to increase the threshold from their proposed £1 million to £2.5 million, with full transferability between spouses and civil partners. This change is a significant shift from their earlier proposals and provided great certainty for many family farms across Northern Ireland.
It is important to be clear about how this change came about, as it was not accidental or inevitable. It followed sustained pressure from a combination of backbench Labour MPs who raised concerns about the impact, coordinated lobbying from farming unions across the UK, regular farmer protests and tractor runs both in Westminster and across the UK, and strong engagement from local and national media. We are grateful to all UFU members who wrote to their MPs, participated in protests and tractor runs, and ensured the issue remained politically salient.
However, this is not the end of the issue. For UFU, this marks a transition into a new phase of the campaign rather than a conclusion. The current position remains a policy decision of the Government of the day, not a permanent settlement. Our focus, grounded in political realities, must be on ensuring the opposition parties clearly commit to reforming or overturning these changes, and that those commitments are written into election manifestos. Analysis from DAERA estimates that approximately 5% of farms remain affected by the proposed changes, and we must not leave anyone behind.
Alongside that political work, UFU’s direct lobbying continues. We will keep engaging with Treasury officials, MPs and Peers, to ensure Northern Ireland’s unique farming structure is properly understood. Our sector has high asset values but low margins, and strong reliance on owner-occupied farms, and policies that are designed around corporate business models simply do not translate well into this context. Only in the last week has our President met with a senior Labour MP, a senior opposition MP, and a number of other parliamentarians on the issue to make this case directly to them.
One of our most significant concerns moving forward is the risk of inheritance tax becoming a tax by stealth. While the £2.5 million threshold is welcome, it will only remain meaningful if it is regularly adjusted. If the threshold freeze is endlessly extended, inflation and land value growth will steadily draw more farms into the tax net, even where there has been no real increase in wealth or income. There is also a clear precedent for this concern, as the inheritance tax nil-rate band has been frozen at £325,000 since 2009. If that had been indexed to inflation, it would sit at approximately £525,000 per person today. Over that period, asset values across the economy have increased substantially, and more families are now exposed to inheritance tax than was originally intended. Freezing the APR threshold would repeat this pattern on a much larger scale for farm businesses. This is why the UFU will continue, in the short term, to argue for thresholds to be uprated in line with inflation, or reviewed regularly.
We also remain concerned about the wider interaction between inheritance tax, capital gains tax, and succession planning. Farm families need clear and stable rules to plan decades ahead, and frequent changes, freezes or uncertainty will make it harder for the next generation to invest, innovation, and commit to the industry.
The Government’s recent movement shows that constructive engagement can deliver, and it demonstrates the value of evidence-based lobbying and the importance of farmers making their voice heard by other means too. But it also shows that continued vigilance is essential.
For UFU, the inheritance tax fight continues, and we will build on this progress, press for durable political commitments, and challenge any attempts to allow inheritance tax to quietly expand through inaction. Alongside political lobbying, we continue to explore all available legal options. Our objective remains to protect the ability of farm families in Northern Ireland to pass their livelihood from one generation to the next as viable, working businesses.
