Data from UK leading law firm, Weightmans reveals that Farmers in the North East could be hit hardest by Farmer Inheritance Tax where inheritance tax liabilities could surpass £1.85 million, taking an estimated 17 years of earnings (£112,300 per year) to pay off.
Thousands of family-run farms across the UK could be forced to sell land or shut down as the government introduces a new inheritance tax (IHT) levy on agricultural assets exceeding £1 million, set to take effect from April 2026. The proposed 20% tax on inherited farms is expected to place severe financial strain on multi-generational businesses, with some families facing tax bills exceeding £300,000.
In light of this, lawyers at Weightmans investigated which regions are most at risk. Revealing how much will farms be forced to pay and how many years of hard work it will take just to clear the tax bill.
While the £1 million threshold may sound high, most commercial farms in England, Scotland, and Wales already exceed this value, making the tax an unavoidable burden for thousands. According to Savills Farming Report, 27% of family sales in the UK in 2024 were due to debt and financial restructuring as politics influenced landowners to put their properties on the market, with 44% more farmland marketed than the previous five-year average.
How Many Years Will It Take for Farmers to Pay This Tax?
If the government’s proposed inheritance tax (IHT) reforms proceed as planned, most family farms will require careful tax planning. Our analysis indicates that on the average farm, farmers could expect a tax bill of over £313,242—which would take over three years of cash income to pay back.
In the UK, the average cash income for farms is £102,100 per farm. Only 41% of farms have a business income of over £50,000 or more and 17% of farms had a business income of less than zero. Inheritance Tax (IHT) can have a significant financial impact on farm owners across the UK, as while larger farms can have significantly higher tax values, this doesn’t match up with the income that these farms are making.
The size of farmland plays a critical role in determining tax liabilities. In the North East, where the average farm size is 1,183 acres, total farm values reach over £10 million, leading to an IHT liability of £1.85 million. With an average farm income of £112,300, it would take an estimated 17 years of earnings to settle this tax burden.
Similarly, in high-value regions like the East of England and East Midlands, farm values exceed £3 million, with tax liabilities surpassing £400,000, taking an estimated four years to pay off. This stands in stark contrast to areas such as West Scotland and the Lothians, where lower land values and smaller farm sizes mean IHT liabilities are as low as £13,600 and £25,000, respectively—amounts that could be covered within a single year’s income.
Regional differences in farmland values and inheritance tax (IHT) liabilities reveal a clear pattern, particularly across England. The East of England experiences both high land values and larger farm sizes, resulting in some of the highest IHT burdens in the country. In this region, farm owners can expect tax liabilities ranging from three to seventeen years’ worth of their cash income, making estate planning crucial to avoid financial strain.
In contrast, the South West—including areas such as Cornwall—has above-average land values but smaller farm sizes. As a result, while IHT liabilities still exist, they are significantly lower than in the East. In many cases, these tax obligations could be covered within a single year’s worth of cash income, presenting a far more manageable financial outlook for farming families in the region.
| Region | Avg. Land Value (£/acre) | Avg. Farm Size (acres) | Avg. Farm Value (£)* | IHT Liability (£) | Avg. Cash Income (£) | Years to Pay Off IHT |
| North East | 8,687 | 1183 | 10,276,721 | £1,855,344 | 112,300 | 17 |
| East of England | 10,000 | 307 | 3,070,000 | £414,000 | 112,300 | 4 |
| East Midlands | 8,900 | 361 | 3,212,900 | £442,580 | 112,300 | 4 |
| South East | 8,675 | 308 | 2,671,900 | £334,380 | 112,300 | 3 |
| West Midlands | 9,750 | 256 | 2,496,000 | £299,200 | 112,300 | 3 |
| North West | 8,687 | 288 | 2,501,856 | £300,371 | 112,300 | 3 |
| Central Scotland | 5,375 | 373 | 2,004,875 | £200,975 | 84,600 | 2 |
| Highland and Islands | 3,500 | 444 | 1,554,000 | £110,800 | 84,600 | 1 |
| North East Scotland | 5,625 | 250 | 1,406,250 | £81,250 | 84,600 | 1 |
| Scottish Borders | 5,125 | 313 | 1,604,125 | £120,825 | 84,600 | 1 |
| South West | 8,700 | 206 | 1,792,200 | £158,440 | 112,300 | 1 |
| Lothians | 7,500 | 150 | 1,125,000 | £25,000 | 84,600 | 0 |
| South West Scotland | 3,875 | 295 | 1,143,125 | £28,625 | 84,600 | 0 |
| West Scotland | 4,000 | 267 | 1,068,000 | £13,600 | 84,600 | 0 |
| Yorkshire and Humber | 8,687 | 33 | 286,671 | n/a | 112,300 | n/a |
*farm value calculated by taking total acres and total number of farms sold in UK in 2024 according to Strutt and Parker, to find average number of acres per farm. This was then multiplied by the average value per acre.
Naomi Woods, Partner at Weightmans comments,
“The proposed inheritance tax reforms pose a serious threat to the future of family-run farms across the UK. With many agricultural estates exceeding the £1 million threshold, these changes could leave farming families facing tax bills of up to £300,000, sums that cannot be met through annual profits alone. This risks forcing farms to sell land, and livestock, or even shut down entirely. Given the scale of the challenge, it is crucial that farmers take immediate steps to review their estate plans, explore potential tax reliefs, and consider restructuring ownership to protect their businesses for future generations. Without careful planning, this tax could accelerate the decline of traditional British farming.”
Data sets:
https://www.gov.scot/publications/scottish-farm-business-income-annual-estimates-2022-2023
