Agricultural Property Relief and Let Farms/Land

Land let under tenancies commencing pre-1 September 1995 qualifies for Agricultural Property Relief (APR) from Inheritance Tax at 50% and land let after 1 September 1995 generally has 100% APR. This is a widely known reason for letting land under Farm Business Tenancies (FBTs) under the 1995 Act, but when tax planning tenants are understandably wary of landlords seeking to extinguish Agricultural Holdings Act (AHA) tenancies in favour of FBTs, due to the favourable treatment of tenants under the old regime.

However, succession tenancies, under the AHA, granted post-1 September 1995 qualify for 100% APR in the same way as FBTs. Another important concession is the surrender and re-grant of a tenancy either by adding land or under Section 4(1)(g) of the 1995 Act without significant change. This latter point maintains the full rights (and liabilities) of the parties whilst providing 100% APR for the landlord.

It must be noted that APR continues to be attacked by HMRC and even if the tenancy qualifies, where holdings include a house, this property must remain a working farmhouse. The occupation of the tenant other than in agriculture or changes made to the appearance of the house can result in HMRC seeking to apply a proportion of the value as falling outside agriculture and hence the relief not applying.

Ralph CollinsMRICS

Partner

Ralph is a Partner in the firm’s Rural Division and is head of the Shrewsbury Office. Ralph advises mainly private clients in mid and North Wales as well as in Shropshire on a range of rural prope...

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Ralph is a Partner in the firm’s Rural Division and is head of the Shrewsbury Office. Ralph advises mainly private clients in mid and North Wales as well as in Shropshire on a range of rural property matters especially those relating to landlord and tenant, settlements and capital taxation. He is instrumental in energising traditional estates and their redevelopment as thriving rural enterprises.  Ralph is a keen field sportsman and takes enormous pleasure from days following hounds and rough shooting, his great delight is in seeing his children becoming more able at both.

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