Benn Affirms Most Northern Ireland Farms Unaffected by Budget

Hilary Benn, the Northern Ireland Secretary, has defended the initial Labour Budget in 14 years and its implications for the agricultural industry. Mr. Benn asserted that most farms would not experience effects from the alteration to inheritance tax relief for farmers. Nevertheless, William Irvine, president of the Ulster Farmers’ Union, has labeled the measure “a blow” to the farming community. During Wednesday’s budget presentation, Chancellor Rachel Reeves declared that, although no inheritance tax would be levied on combined business and agricultural assets valued under £1m, assets exceeding this threshold would incur a 20% tax starting April 2026 – which is half the standard inheritance tax rate. Additionally, the Chancellor revealed a £1.5bn supplementary funding package for Stormont on Wednesday. On BBC’s Good Morning Ulster programme, Mr. Benn characterized the Budget as providing “the biggest real-terms settlement since the start of devolution for Northern Ireland”. Conversely, certain small business proprietors and young farmers have expressed concerns that the modification to agricultural property relief (APR) could have a “devastating” effect. Richard Beattie of the Young Farmers Union stated that “most farmers across Northern Ireland are already being impacted by land and asset inflation”. He further commented, “The sustainability of the family-farming business is made a lot more difficult with the added burden of inheritance tax.” Mr. Beattie also added, “For a young person to take on a potentially six-figure inheritance tax bill on the family farm business is a huge debt burden.” Mr. Irvine mentioned that the leaders of the four farming unions had communicated with the Chancellor, pressing her to uphold inheritance tax reliefs for agricultural enterprises. He elaborated, “These changes to APR compromise the liquidity needed for succession planning on farms of all sizes, eroding the very foundation of our agricultural sector.” Following the Budget on Wednesday, he observed that farmers might possess substantial assets but lack ready cash. He also predicted a reduction in family-owned farms as a direct consequence of this policy. He noted, “[The] majority of farms in England and Wales are maybe tenancy agreements where farmers don’t own the land. Whereas specifically in Northern Ireland the majority of farms are family owned, they own the assets, the land, the buildings, the livestock.” On Thursday, Benn reiterated that most farms would continue to be untouched by these provisions. He stated, “There will be no inheritance tax on the first one million, the rate after that will be half the general inheritance tax rate of 40%.” He further indicated, “The treasury says they expect only around 500 agricultural estates across the UK to be affected next year.” He also pointed out that if an estate is transferred to a spouse, no inheritance tax is due, and the inheritance tax obligation can be settled over a decade. According to the Irish Farmers Journal’s yearly land price report, the average cost for agricultural land in Northern Ireland during 2023 was approximately £13,800 (€15,500) per acre (0.4 ha). Financial aid provided to farmers in Northern Ireland will cease to be “ring-fenced” and will instead be determined via Stormont’s Budget procedure. Prior to Brexit, subsidies were disbursed directly by the European Union. In the period following Brexit, the UK’s devolved administrations received a specific, ring-fenced supplement to their standard Treasury allocations for subsidy payments. The government announced that this particular arrangement would conclude next year. Funds previously designated as ring-fenced for subsidies will now be incorporated into each devolved government’s “block grant”. A representative from Stormont’s Department of Agriculture, Environment and Rural Affairs (Daera) stated: “From 2025-26 agriculture and fisheries funding has been included in the Northern Ireland Executive’s baseline at the same level as 2024-25.” The spokesperson added, “It will therefore be for the executive to decide on the level of funding to be provided… This will be agreed as part of the executive’s Budget.”