The changes to UK Inheritance Tax (IHT) applying from 6 April mean family-run businesses will now have to devote much more time and effort into thinking about how they pass on assets to the next generation.

Initially the plan outlined in the autumn 2024 budget was for a new £1m cap on agricultural and business property relief (APR/BPR) from IHT, which would be non-transferable between spouses.

In the end, following intense lobbying from farm organisations, significant changes were made and we have ended up with a £2.5m cap on agricultural relief and business relief from IHT, with 50% relief thereafter. Any unused allowance can be transferred between spouses.

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While those changes take most agriculture businesses in NI outside of the scope of IHT, we should not forget there are many farmers who are not married and still worried for the future.

It is also important to note that the personal allowance of £325,000 has not changed since 2009 and along with agricultural and business relief, these allowances will remain frozen until 2031. Given ongoing inflation in the local land market, the whole issue of IHT is not something many NI farmers can simply ignore.

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Over the last 18 months it was farmers who led the campaign against the IHT changes. However, the new cap on assets affects all family-run businesses, not just farmers.

They come at a time when these businesses are being hit by increases in the national living wage, higher business rates and a hike in energy costs. Taking everything together, there is less incentive to invest and expand, leading some business leaders to warn of a high risk of closures and people selling off parts of their company to keep within IHT limits.

Where that happens, the evidence from our own industry is that these small businesses are bought up by large multi-national companies utilising borrowed capital. With huge debt to service and corporate investors to please, the links to local communities are being gradually eroded. The UK Labour government’s contribution to this direction of travel will not be easily forgotten.