There will be no exemptions which would allow elderly or terminally ill farmers to be excluded from new inheritance tax rules, a treasury minister has indicated.
Exchequer secretary to the Treasury Dan Tomlinson described the new £1m limit on agricultural and business property relief (APR/BPR) as “fair and necessary”.
With the new rules coming into effect in April 2026, elderly and terminally ill farmers are particularly exposed to inheritance tax bills on their estates.
The issue stems from the so-called “seven-year rule” where inheritance tax is still payable if the previous owner of an asset dies within seven years of gifting it to someone else.
In a letter to four ministers from the NI Executive, Tomlinson ruled out any relaxation of the seven-year rule on the basis that it would reduce tax intake for the UK government.
“Providing special treatment for older individuals […] would have a significant effect on the revenue raised over the next few years to help fix the public finances and fund public services,” he said.
The Labour MP said “most estates” that pay inheritance tax tend to belong to people aged over 75 years, so any policy change “will always have a more significant effect on older individuals”.
“Similarly, the development of a terminal illness could restrict the ability of any individual with any type of assets to make lifetime gifts in the hope of living for a further seven years,” he said.
The letter was sent to First and deputy First Ministers Michelle O’Neill and Emma Little-Pengelly, Agriculture Minister Andrew Muir and Finance Minister John O’Dowd.
It comes after the four ministers jointly wrote to the Treasury last month about the impact of inheritance tax changes on NI farming families.
Transferable
In his response, Tomlinson highlighted a change which was included in the 2025 Autumn Budget, where any unused APR/BPR can be transferred between married couples and civil partners.
He said making APR/BPR transferable “reduces the complexity and planning” for couples who want to make full use of each person’s £1m APR/BPR allowance.
“This change will apply to widows and widowers, including where the first death is many years before 6 April 2026,” he said.
APR change is ‘sensible reform’ – PM
The upcoming changes to inheritance tax have been described as “sensible reform” by Prime Minister Sir Keir Starmer.
Speaking to a committee of MPs on Monday, Starmer defended the policy by reiterating the government’s argument that three quarters of farms will not be affected.
The Labour leader dismissed the suggestion that the APR/BPR reform is targeted at older and terminally ill farmers who have little or no options to avoid the tax.
“There is a difference between changing the tax regime and targeting a group of individuals. This is about changing the tax regime,” he maintained.
The Prime Minister was questioned about the proposal for an anti-forestalling clause, which can bring farmers into the new inheritance tax regime even if they transfer assets before April 2026.
“It is a necessary consequence of the decisions that we have taken,” he responded.
During the meeting, some of the heaviest criticism came from one of Starmer’s Labour party colleagues, Lancaster MP Cat Smith.
She asked the Prime Minister if he was aware of that some elderly and terminally ill are contemplating suicide ahead of the new inheritance regime taking effect next April.
“I have had discussions with a number of individuals who have drawn all manner of things to my attention,” he responded.
Finance Bill moves to the next stage
The Finance Bill, which is the legislation that enacts various tax measures announced in the UK budget, moved to the next stage following a debate in Parliament on Tuesday.
However, much of the three-hour session was dominated by concerns raised by opposition MPs around changes to inheritance tax.
Two Labour MPs also voiced their concerns, including Markus Campbell-Savours, the Penrith and Solway MP who had the whip removed after he voted against the government’s inheritance tax changes earlier this month.
Full U-turn
“I will not be supporting the agricultural inheritance tax proposals. I want a full U-turn,” he said.
Also breaking ranks was Scarborough and Whitby MP Alison Hume, who asked for the anti-forestalling clause to be removed.
“We have shown before that we can listen and amend our policies. It is my hope that we can show the same compassion for our farmers in the winter of their lives as we have for our children in the spring of theirs,” she said.
SHARING OPTIONS