Farming families face 'devastating' inheritance tax changes, says UFU

Almost nine in 10 farming families are experiencing increased stress and worry as a result of inheritance tax changes, while more than seven in 10 fear for the future viability of their farms, according to new findings released by the Ulster Farmers’ Union (UFU).

The organisation has warned that changes to Agricultural Property Relief and Business Property Relief introduced by the previous UK Government are having a significant impact on family farms across Northern Ireland, affecting succession planning, investment decisions and confidence in the future of the sector.

The findings form part of the UFU’s A Budget to Back Farming campaign and are based on what the organisation describes as one of the most detailed assessments yet of the impact of inheritance tax changes on the local farming industry.

According to the survey, 88.6% of respondents reported increased family stress or worry as a result of the changes, with 60.3% saying the increase had been significant.

The report also found that 71.4% of farmers had reduced confidence that their farm could be passed on to the next generation as a financially viable business. Meanwhile, 58.5% expect the inheritance tax changes to create or increase a tax liability.

More than a third of respondents, 37.2%, anticipate an inheritance tax bill of at least £100,000, while 23.4% expect liabilities of £250,000 or more.

The survey highlighted concerns about the long-term future of farming, with 49.2% reporting that their intended successor has become less willing, less financially able, or both, to take over the family farm.

In addition, 42.2% said they had already reduced, postponed or cancelled farm investment, or were in the process of doing so, directly because of the inheritance tax changes.

UFU President John McLenaghan said the findings confirmed fears that the policy was placing unsustainable pressure on farming families.

“These findings are nothing short of devastating. We have warned repeatedly about the consequences of these inheritance tax changes, but we now have clear evidence from farming families themselves of the damage being done.

“Almost nine in ten reporting increased stress or worry should stop the Government in its tracks. These are not wealthy individuals sitting on disposable fortunes. These are hardworking farming families whose ‘wealth’ is tied up in the land, buildings and machinery they need to produce food. Families who have spent generations building their businesses are now facing the prospect of enormous tax liabilities, with many questioning whether their farms can survive the transition to the next generation.

“The Government talks about protecting UK food security while pursuing a policy that is undermining the very family businesses responsible for producing our food. That contradiction cannot be ignored, and there exists a renewed opportunity at the Autumn Budget to change course and restore their relationship with agriculture.”

The UFU said the consequences extend beyond future tax bills and are already affecting day-to-day business decisions.

Mr McLenaghan said the impact on investment was particularly concerning, with money that would otherwise be used for development and improvements being held back.

“This is not a problem waiting to happen when a farmer dies. The damage is happening right now. Money that should be going into farm buildings, environmental improvements, increasing efficiency, and the future of food production is instead being held back as families try to prepare for potential tax liabilities.

“Every investment that does not happen has consequences, not only for the farm but for the wider rural economy.

“Perhaps most worrying of all is what this means for the next generation. Almost half of respondents are telling us that their intended successor is now less willing or less financially able to take over the farm. We cannot afford to lose the next generation of food producers because of a tax policy that fails to recognise the realities of farming.”

The UFU plans to present the report to parliamentarians in the coming days, highlighting the impact inheritance tax changes are having on family farms, succession planning and investment ahead of the next Budget.

Mr McLenaghan concluded: “The Chancellor now has an opportunity to listen to the evidence and address the damage highlighted in this report. This is about far more than inheritance tax. It is about whether the next generation can afford to farm, whether family businesses can continue investing and whether the UK is serious about protecting domestic food security.

“We hope this Government will recognise the strength of this evidence and use the Budget as an opportunity to provide the certainty and confidence farming families desperately need. We want to work constructively with Ministers to secure a future where family farms can thrive, invest and pass viable businesses to the next generation.

“Our message is simple: protect family farms, protect the next generation and protect the future of UK food production.”