On Tuesday, thousands of farmers from Northern Ireland travelled to London to join a mass protest at what they view as a devastating attack on their children’s future livelihood.
The Metropolitan Police found themselves dealing with rogue tractors driving through barriers in central London, while one young farmer said the government had effectively created “a lottery on death”.
The Labour government claim most farms won’t be affected and that “difficult decisions” had to be made to plug a £22bn hole in public finances.
TV presenter Jeremy Clarkson, now the UK’s most famous farmer after his Amazon series, was among the protestors and accused the Chancellor Rachel Reeves of using a “blunderbuss” against farmers in a poorly thought out policy.
What are the changes involved?
Farm businesses used to qualify for 100% relief on inheritance tax on agricultural and business property.
This allowed for farms to be passed down from one generation to another without added financial pressure.
The tax is now being imposed on farms worth over £1m, with a tax rate of 20% of assets above that threshold.
This is still half the normal 40% rate for inheritance tax.
There is no inheritance tax to pay if an estate is worth less than £325,000, with the threshold increased to £500,000 if left to children or grandchildren.
Why have the government introduced the policy?
The Prime Minister, Sir Keir Starmer, has insisted that only around 500 estates will be affected, and that other tax measures available for farm-owning couples mean that only assets over £3m would actually be affected.
Environment Secretary Steve Reed also claims the current system has become “the most effective way for “the super-rich to avoid paying their inheritance tax”, increasing rural land prices and preventing young farmers from owning their own land.
How have farmers in Northern Ireland reacted?
In Northern Ireland, over 6,000 farmers and landowners attended an Ulster Farmers’ Union rally in Lisburn on Monday night.
UFU President William Irvine called it a “devastating” policy that will “threaten every generation in the future.”
He said claims of £3m in relief was “utterly misleading,” and that Agricultural Property Relief (APR) ignores Business Property Relief for stock, machinery and assets.
“By twisting the numbers, they paint a picture that 73% of farms won’t be affected. This is not just wrong – it’s deceptive,” he said.
Ross Boyd, managing director of Belfast accountancy firm, RBCA, doubts the government’s figures.
“The government say only 500 estates a year will be affected, that feels to me a like a low number,” he said.
“I know the NFU are talking about 70,000 farms being affected.
“So suddenly, farmers are looking over their shoulder and I feel more will be affected than what the government are suggesting.”
He said at the very least, farmers were “absolutely right to be up in arms” after a lack of consultation.
Specific issues for Northern Ireland, he said, was that farmland and houses could be expensive, making it easy to tip over the £1m threshold.
“Farmers don’t tend to have a lot of cash, they don’t have the same ability to grow a business in the same way a regular business owner does,” he said.
“They could sell part of their land, but that makes their farm less viable.”
He took issue with the claim that that the cap would really be £3m for many farms.
“I’ve spoken to solicitors who do conveyancing, who tell me most farms are owned by a father and it tends to pass from father to son,” he said.
“Very rarely is a farm owned in Northern Ireland by a husband and wife. So to get that £3m, farmers would all have to transfer half their farm to their wife.
“That’s not straightforward.”
Asked if it was good news for young farmers without a farm to inherit, he said: “There is an argument this could give new people a chance to get their start in farming.
“I feel what’s really happening is that it’s taking money out of the rural economy and putting it into taxation, which in all likelihood will be spent in urban areas.”
Citing the winter fuel allowance as an example, he did not believe the government were likely to back down.
What happens next?
Mr Boyd said he now expected a surge in gifting, or a potentially exempt transfer (PET), where a farm can be given as a gift to the next generation.
The catch is that if a death occurs within seven years, inheritance tax will still apply.
“There’s a gamble. This is when you get a cliff edge, for example if a farmer is well into his 80s.
“If they are 65, it might be less of a risk. This might sound morbid, but there’s nothing to stop illness or an accident causing their death.”
He predicted farming families across Northern Ireland would now be looking at every option available.
“The more you increase taxation, the more people will find ways around it,” he said.
Mr Boyd also disagreed the policy would help deal with wealthy landowners using farming as a tax loophole.
“People who do that are unlikely to just be using land,” he said.
“These are people with very sophisticated affairs and they will get round this by doing whatever they need to do. It could be money going offshore or whatever it is.
“Being a Northern Irish accountant, I don’t see many people like that.
“But Northern Ireland is quite exposed to a lot of farms worth over £1m. I can’t think of any that do it just to avoid inheritance tax."
