Agricultural lawyers in NI are preparing to offer advice to farming clients based on the assumption that new inheritance tax proposals will not change.

The proposals, which were originally announced last October, will see a new £1m cap applied to agricultural property relief (APR) and business property relief (BPR) combined from April 2026.

Until now, most lawyers had been urging farming clients to hold off on making any changes to their succession plans in case the proposals were altered.

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However, policy papers and draft legislation published by the UK government on Monday 21 July contained no substantive changes to the inheritance tax proposals.

“They have not moved a single millimetre on this,” said one NI-based agricultural lawyer.

There is still a possibility that amendments could be added to the legislation as it moves through Parliament in the autumn.

But with Labour commanding a huge majority and the lobbying campaign by farm groups so far failing to cut through, securing meaningful changes will prove difficult.

Agricultural lawyers have indicated that the first step for most farmers will be to work out exactly who owns what within the family farm.

Then figuring out a realistic valuation of all assets, including land, livestock, machinery and any other property, is crucial for working out each person’s exposure to the new tax regime.

The exact advice after that will ultimately be specific to each farm and depends on individual circumstances within the farming family.

Dismissed

It is noteworthy that even relatively uncontroversial proposals for amending the new inheritance tax plan have been dismissed by the UK government.

This includes the popular suggestion that unused proportions of the £1m APR/BPR limit should be transferable between spouses.

This would have brought the new APR/BPR allowance in line with other inheritance tax reliefs and would make succession planning a lot less complicated for many families.

However, in a policy paper published last week, the UK government argues that this change would effectively hit tax intake.

“[It] would carry an exchequer cost. For this reason, the £1m allowance will continue to be available for individuals and will not be transferrable,” the paper reads.

Inflation

One new addition to the tax plan is that the £1m APR/BPR limit will increase in line with inflation from 2030.

However, legal experts point out that this increase will not be automatic. It requires a similar legal mechanism which already applies to other inheritance tax reliefs, and many of these have not changed in over 15 years.