Chartered Accountants Ireland’s Northern Ireland Tax Committee has reiterated its concerns in relation to restrictions to agricultural property relief (APR)and business property relief (BPR) for inheritance tax that were announced in autumn’s Budget 2024.
As early as October 2024, ahead of the Autumn Budget, Chair of the Northern Ireland Tax Committee Jeanette Burns wrote to the Exchequer Secretary to the Treasury to highlight the Committee’s ongoing tax administration and policy recommendations and concerns. In that letter, she cautioned against reducing or restricting the scope of APR and/or BPR and highlighted that the impact of any restriction would be particularly damaging for family-owned businesses and the farming sector.
The Chancellor subsequently announced on 30 October 2024 that from April 2026, 100% relief for APR and BPR will be limited to the first £1million of combined agricultural and business property with any value above this receiving relief at 50%, effectively resulting in an IHT liability of 20%.
Impact of the changes
The impact of these changes will be particularly damaging in Northern Ireland where family-owned businesses are the heartbeat of the economy. 84% of businesses in the region are either family owned or managed, and these businesses support over 325,000 jobs.
Farming and agri-food are key sectors in the local economy, and they ensure vital food security with family farms also forming the backbone of the agricultural sector and local rural communities. The proposed changes from April 2026 will have a particularly disproportionate impact on family farms and farming jobs in NI compared to other jurisdictions in the UK. Farming is the biggest industry in NI with around 77% of the total NI land area of 1.35 million hectares used for agriculture. In June 2024 there were over 26,000 farming businesses in Northern Ireland supporting over 51,000 jobs.
Cróna Clohisey, Director of Members and Advocacy at Chartered Accountants Ireland said
“In recent days, Chartered Accountants Ireland wrote to the Government to express our concerns about the proposed restrictions to agricultural property relief and business property relief due to take effect from April 2026. These proposals, which could result in significant tax liabilities, are already causing deep problems and distress for family businesses and farms across the UK, but we are concerned about the particular impact for family-owned business and farms in Northern Ireland.
“We understand that governments need to make difficult decisions, however the lack of prior consultation on these particular changes means the government has failed to grasp the extent of the impact on genuine business and farming activity in the UK.
“These changes will starve businesses and the economy of much-needed investment and could cause forced, premature business sales and the loss of jobs, lives and livelihoods. In the current uncertain geopolitical environment, the Government needs to do whatever it can to protect genuine business and farming activity in the UK.
“The Institute urges the government to postpone the changes and engage with stakeholders to reframe this policy change in a way that it is more effectively targeted. We are also asking the government to consider a range of potential mitigations to curtail the impact of these proposals.”