‘If a big firm bought my farm they wouldn't pay inheritance tax… but my children would'

Belfast Telegraph

22-04-2025

Sam Chesney, a first generation beef and sheep farmer from Co Down, hopes to pass his 120-acre farm to his two children but believes IHT will prevent him from doing so.
'My children's inheritance tax will be in the hundreds of thousands. If Tesco or the National Trust were to buy this farm they would never pay inheritance tax. But if my neighbour buys this farm and he dies, he will pay it. Then they want another 20% inheritance tax with every successive generation which is ludicrous.'
William Irvine, president of the Ulster Farmers Union (UFU) cites the case of a farmer with 'a significant farm business and the collateral in his mother's name.
She is in her 80s with dementia and the farmer can do nothing. He just has to sit and wait. As it stands, he will have to sell a significant land amount of land [to cover the inheritance]. In that case, three generations of work is going to be wiped out.' IHT is prompting farmers to reassess the future and viability their profession, says William, a seventh generation dairy farmer from Mountnorris in Co Armagh. 'The civil servants within Treasury came up with this grand scheme. The Treasury, for whatever reason, has got this wrong.'
Under changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) in the last budget, farmers with combined business and agricultural assets worth over £1m will be charged 20% IHT from April 2026. Since 1984, agricultural land, machinery, livestock, farm buildings and houses have been exempt from the tax.
A government spokesperson told Ulster Business that reform to the Agricultural and Business Reliefs 'will impact around 500 estates a year. For these estates, inheritance tax will be at half the rate paid by others – with 10 years to pay the liability back interest free. This is a fair and balanced approach which will help fix the public services we all rely on.'
The Treasury's assessment is in stark contrast to analysis from the Department of Agriculture, Environment and Rural Affairs (DAERA), published last December, which found that around half of all farms – an estimated 13,000 in Northern Ireland – could be impacted by inheritance tax changes. Farmers believe the Treasury severely miscalculated the true value of farms.
Until now 'the advice from HMRC was 'don't worry about revaluing your farm during generational change because it didn't affect anything. It was just a legal process of transferring deeds',' William says. As a result, 'a true up-to-date valuation of farm business accounts was not in place.'
Various factors push Northern Ireland farmers above the £1m mark, says Cormac McKervey, Ulster Bank's head of agriculture. 'The average price of land in Northern Ireland is around £15,000 an acre. In counties like Armagh it's £20,000.' Assets push this pricing further upwards. 'Add in the farmyard, buildings, dwelling house, the value of stock and machinery, and you're probably looking at £25,000 an acre.' At £25,000 an acre, a 40 or 50 acre sized farm will automatically trigger into inheritance tax.
The average farm size in Northern Ireland is around 100 acres. Sam Chesney owns around 120 acres of land and rents ground as well. 'You couldn't live on the postage of 50 acres,' he says.
There is no relation between the capital value of farmland and earning power from farming, which is valued at 1% to 2% per annum in Northern Ireland, according to Cormac. 'If a farm has 100 acres – a standard family farm in Northern Ireland – in theory it is worth £2m. It generates enough money to just about meet its commitments but in no way does it ever generate the amount of money needed to capture an inheritance tax bill.'
Farmers will be able to pass on farmland without paying IHT as long as the donor lives for seven years after the transfer is made. But spreading collateral across children comes with cost and risk, says William.
'A teenager, for example, is not well enough saddled on life's journey to know whether he wants to spend the rest of his life on a farm or whether he has other ambitions.' The UFU president is passing his collateral to his son 'in the hope I will live for the next seven years. If I'm fortunate, with the help of God, I will do that. But if I was 80, that's a far bigger question. If I was 40, the next generation isn't at the stage that's a viable possibility. It's a lottery.'
Famers facing a £200,000 IHT invoice for a farm valued at £1m might have to sell off land in order to make the payment. Sam Chesney equates this to 'a builder or a plumber selling his van or a shopkeeper selling part of his shop floor'. Another option would be to borrow money to cover the debt. 'The problem with [loans] is that the land doesn't generate the return that other business assets might do – it's a long term gain,' Cormac says.
Farmers have organised mass protests calling for the government to reverse course. Fifty UFU members recently attended a Pancake Day Rally in London and farmers brought along machines required to grow pancake ingredients – a combine, sugar beet harvester, tractor, seed drill, and a crop sprayer - in order to highlight the monetary investments required to produce food. The UFU has been involved in intensive lobbying.
'I feel we are winning this argument everywhere apart from at number 10 [Downing Street],' says the union's president. 'If we go quiet on this, the government will think they've won, so we need to keep the pressure on.'
Although farmers have explained the facts and figures for what they believe is the Treasury's miscalculation, the government has yet to budge. In a statement, a government spokesperson highlighted a £5bn commitment for farming in the last budget which includes schemes directed at sustainable food production. The budget also included £60m through the Farming Recovery Fund and the establishment of a new British Infrastructure Council to steer private investment in rural areas.
Farmers believe all is not lost. There is a 'window of opportunity for the government to pause, consult or change [the proposed legislation]', William says. The window will not be open much longer though. Following the autumn budget this year, a finance bill will cement changes to APR and BPR in legislation. 'Our commitment to farmers remains steadfast and our Plan for Change will protect food security and grow the rural economy,' the government spokesperson told Ulster Business. Farmers are not so sure. 'We produce food in Northern Ireland for 10 million people, even though there's only a million and a half of us [in the province],' says Sam Chesney. 'The world is a very difficult place at the minute. A country lives and survives on its stomach.'
Cormac McKervey, Ulster Bank's head of agriculture, recommends that farmers 'get good legal and financial advice from their accountant or solicitor' and don't take knee-jerk reactions. 'Sit down and plan this out. It's a very emotive subject for farmers but you need to take the emotion out of it and ask, 'What is my long-term business plan?' This will open up a discussion about succession. Sometimes it is not discussed until the farmer dies. But now there will hopefully be a more open and honest conversation about planning for succession.'