Surrender and Re-Grants – Good Tax Planning or A Potential Liability?

The Tenancy Reform Industry Group (TRIG) enabled landlords and tenants to document new Agricultural Holdings Act tenancy agreements allowing the parties to change the terms and the amount of land included without the risk of the tenant’s security of tenure being prejudiced. The advantage of this change under TRIG was that the parties could make sensible amendments to the tenancy that reflected good estate management and the commercial circumstances that prevailed at the time whilst staying within the Agricultural Holdings Act.

A further key advantage to landlords has been that these Agricultural Holdings Act tenancy agreements attract 100% Agricultural Property Relief (APR), rather than just 50% APR, because they started after 1995. Many landlords have entered into negotiations with their tenants to agree terms for new tenancies with the aim of securing the considerable benefit of 100% APR. However, it is becoming of increasing concern that whilst the landlord may well secure 100% APR there could be some disadvantages to the tenant in the form of a potential SDLT or CGT liability. Many tenants have been seeking an indemnity from their landlord against any future taxes as a consequence of making changes to the tenancy which landlords need to weigh up carefully against the APR benefit they may be seeking.

Iain NottMRICS, FAAV

Senior Associate

Iain is an Associate based in the Peterborough office advising on a wide range of rural property matters including landlord and tenant negotiations, valuations, sales and acquisitions, and asset m...

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Iain is an Associate based in the Peterborough office advising on a wide range of rural property matters including landlord and tenant negotiations, valuations, sales and acquisitions, and asset management tasks on diverse rural estates. He has also been involved with the emerging anaerobic digestion and coal bed methane extraction sectors.  Iain enjoys riding and sailing in his spare time.

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