Reacting to: No changes to inheritance tax in UK Budget 2026 (Agriland, 28 October 2026) →
Chancellor John Healey's Budget on 28 October 2026 made no change to inheritance tax on farms. For a Northern Ireland farming family, that is not quite the reassurance it sounds like. The cap that decides how much of a farm estate is taxed was fixed in cash terms back in the 2024 Budget. Northern Ireland land prices were not fixed anywhere, and they just had their best year on record.
Put those two facts together and the real story isn't "nothing changed." It's that a cap which felt generous when it was announced is quietly becoming binding on ordinary working farms, not just the largest estates — and this Budget was the moment that could have adjusted it, and didn't.
What the Budget actually confirmed
Agricultural Property Relief and Business Property Relief were reformed in the 2024 Budget: first capped at £1 million combined, then raised to £2.5 million, the figure that has applied since April 2026. Up to £2.5 million of qualifying agricultural and business property passes free of inheritance tax. Above that threshold, only 50% relief applies, so the excess is taxed at an effective 20% rather than the standard 40% rate. This Budget confirmed every part of that mechanism unchanged — the Chancellor did not raise the cap, lower it, or alter the 50% taper above it.
The other confirmed change sits further out: from April 2027, unused pension funds and death benefits are brought into a person's estate for inheritance tax for the first time. NFU Mutual's Sean McCann has described the combined effect for some families as a "triple tax blow" — inheritance tax newly applying to pensions, the existing taper on the residence nil-rate band catching a farmhouse alongside other assets on estates over £2 million, and additional income tax where a beneficiary inherits a pension after the saver's 75th birthday.
Why a fixed UK-wide cap bites harder here
The Irish Farmers Journal's annual land price survey, published 7 February 2026, put the average price paid for land in Northern Ireland during 2025 at £15,202 an acre — a record, up 3% (£466/ac) on the year before, from 157 transactions covering over 6,200 acres. Armagh, Tyrone, Antrim and Fermanagh all set new county records; the top 25% of sales averaged £27,232 an acre.
DAERA's June 2025 Agricultural Census, published 11 December 2025, counted 25,834 farms in Northern Ireland working 1,032,296 hectares between them — an average of just under 40 hectares, or about 98.7 acres, per farm. At last year's average land price, that average holding's land alone is worth close to £1.5 million, before a farmhouse, machinery or livestock are added to the estate. A cap of £2.5 million sounded like it was built for large estates in 2024. Two years of record land prices later, it is within reach of a genuinely average Northern Ireland farm.
What that looks like on a working farm's numbers
Take an illustrative 150-acre Co. Tyrone beef and sheep farm — above the Northern Ireland average of 98.7 acres, but far from the biggest operations in the county.
| Illustrative 150-acre Co. Tyrone farm, qualifying estate | Value |
|---|---|
| Land (150 acres × £15,202/ac, NI 2025 average) | £2,280,300 |
| Farmhouse (illustrative) | £350,000 |
| Machinery and livestock (illustrative) | £380,000 |
| Total qualifying estate | £3,010,300 |
| Relieved in full (first £2.5m) | £2,500,000 |
| Remaining, at 50% relief | £510,300 → £255,150 taxable |
| Inheritance tax at 40% on the taxable amount | £102,060 |
Nothing about that farm is unusual for the area — it's a working family holding, not an estate built for tax planning. A farm with a smaller herd, less machinery, or that doesn't own its farmhouse outright could sit comfortably under the cap on the same acreage. The point isn't that every Northern Ireland farm now owes six figures in inheritance tax. It's that it now takes very little extra land, stock or machinery to cross the line from "fully relieved" to "partly taxed," in a way it didn't when the £2.5 million figure was first set.
What this means for your farm this week
Get a current valuation of the whole qualifying estate — land, farmhouse, machinery and livestock — against the £2.5 million combined cap, rather than relying on a valuation from before last year's land price rise. Land that was comfortably under the threshold two or three years ago may not be now. Our farm accounts team can work through that valuation against your actual holding rather than the illustrative figures above.
If any farmland or farm buildings sit inside a SIPP or SSAS pension — a structure some farmers use to hold let-out buildings or extract value for retirement — flag it now rather than in March 2027. Agricultural and Business Property Relief do not apply to property held inside a pension wrapper, and from April 2027 that property is inside the taxable estate with none of the relief that would apply if it were held personally. That's a conversation for your accountant and financial adviser together, well before the change takes effect. For the wider tax planning picture around passing on a family business, see our piece on what a succession tax change could cost, and for the cash-flow side of a strong trading year, our piece on Northern Ireland farm profits passing £1bn and the January tax bill.
What's still uncertain, and when you'll know
The headline figures — the £2.5 million cap, the 50% relief above it, and pensions joining the estate from April 2027 — are settled policy, confirmed rather than altered by this Budget. What isn't yet settled is the technical detail of exactly how farm property held inside a pension will be valued and treated when the April 2027 change takes effect; that detail is expected in guidance and draft legislation over the coming months, and is worth checking for specifically rather than assuming it mirrors personally-held property. Farming organisations, including the Tenant Farmers Association, also used this Budget to renew calls for a Stamp Duty Land Tax relief on agricultural tenancies and protection for surviving joint tenants facing a tax bill without a saleable asset to meet it. The Chancellor did not take those calls up this time; whether a future fiscal event does is genuinely open.
None of this is reason to act today out of alarm — the cap didn't move, and most working farms are not yet over it. It is reason to get an honest, current number against that £2.5 million line before the next land price survey moves it further. That is exactly the kind of planning our tax planning service is built to run alongside your annual accounts.