More than 4,500 farms in Northern Ireland are still likely to face inheritance tax bills despite the threshold being increased to £2.5m, according to new analysis that warns rising land prices could significantly widen the impact.
Fresh figures from the Department of Agriculture, Environment and Rural Affairs suggest that any further increase in agricultural land values could push many more farms above the inheritance tax threshold.
The analysis also highlights structural challenges for farm succession. Almost a third of farmers in Northern Ireland are either not married or do not have a civil partner, meaning they cannot benefit from transferable allowances between spouses. This includes 17% of larger farms, which are more likely to be affected by inheritance tax.
The Assembly’s Daera committee is expected to write to the agriculture minister to restate its opposition to the removal of 100% inheritance tax relief for farms.
Land prices in Northern Ireland have reached record highs in recent years. Under the original proposal to set the inheritance tax threshold at £1m, the department estimated that around half of all farms would have been liable based on land value alone.
The latest modelling assumes an average land value of £21,000 per acre. On that basis, farms with 48 hectares (118.6 acres) or more would exceed the £2.5m threshold and could face inheritance tax charges.
However, committee chair Robbie Butler said the assumptions may already underestimate current market conditions.
“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,” he said.
“And as machinery prices, animal prices, all of those things rise, this is not a fixed item.”
The chancellor announced in November 2025 that inheritance tax allowances could be transferred between spouses or civil partners, a measure that remains in place following the rise in the threshold. Where allowances are transferable, relief of up to £5m can be accumulated.
Even at that level, the department’s analysis suggests about 5% of farms in Northern Ireland would still exceed the threshold when agricultural and business property values are combined.
Declan McAleer, the deputy chair of the Daera committee, said tax planning remains difficult for many farmers, particularly older landowners.
“There’s also an issue where there’s no spouse or civil partners involved as well for passing on,” he said.
“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 that around half of all farms in Northern Ireland would have been affected, covering about 80% of the total land farmed.
Raising the threshold to £2.5m reduces that figure to 4,517 farms, or 17.5% of all holdings, but still represents nearly half of all farmed land. Almost two-thirds of cattle and sheep farms fall into this group, while dairy farms account for roughly a quarter.
The revised inheritance tax threshold is due to come into force from April 2026.