Agricultural Property Relief (APR) is a relief from Inheritance Tax granted by the Inheritance Tax Act 1984. APR is available on gifts of land occupied for the purposes of agriculture, together with appropriate buildings and farmhouses used in conjunction with the land. 


Agricultural property is land or pasture that is used to grow crops or to rear animals intensively. It includes:

  • Growing crops
  • Stud farms for breeding and rearing horses, and grazing
  • Short rotation coppice
  • Land not currently farmed under the Habitat Scheme
  • Land not currently being farmed under a crop rotation scheme
  • Some agricultural shares and securities
  • Farm buildings, farm cottages and farmhouses

It is important to recognise that if horses are grazing land for non-agricultural purposes, the land would be considered non-agricultural and will not be eligible for APR.

Agricultural assets which do not qualify for APR include:

  • Farm equipment and machinery 
  • Derelict buildings
  • Harvested crops
  • Livestock
  • Property subject to a binding contract for sale


Agricultural value is not necessarily market value. The agricultural value of the property is valued by assuming it were subject to a restriction which would mean that it could only be used for agricultural purposes.

For Example:

10 acres of land on the edge of a town

Market Value (potential development) £25,000 per acre = £250,000

Agricultural Value (eligible for APR)     £10,000 per acre = £100,000

Ineligible for APR                                                                  £150,000

For a farmhouse or cottage, a 30% discount on the market value is usually assumed as the agricultural value.  There is limited case law to support it so depending on the property, it might be reasonable that there should be no discount for agricultural value.


The property must have been owned and occupied for agricultural purposes immediately before its transfer for two years if it is occupied by the owner, a company controlled by them or their spouse/civil partner. If the owner does not occupy the property (usually let on a Farm Business Tenancy) they need to have owned it for seven years in order to qualify for APR.


The farmhouse must be employed by someone working in farming, a retired employee or the spouse/civil partner of a deceased employee.

The qualification criteria for a farmhouse have been much debated in courts over the years, in particular on what is ‘character appropriate’. The farmhouse must be of a nature and size appropriate to the farming activity that is taking place.

It is also important to consider from where the farming business is operated; if the farmhouse is used as the farm office this is helpful in a claim for APR as it proves agricultural use.

HMRC also look closely at older farmers as they can choose to view the farmhouse as a ‘home for retirement’ rather than as the centre of operations for the farming business. In these cases it is often sensible to look at allowing the younger generation to occupy the farmhouse provided that they continue to run the farming business from it.


The farm cottages must be occupied by someone employed in farming, a retired farm worker or the spouse/civil partner of a deceased farm worker. They must occupy as a tenant under a lease granted as part of their current or former employment contract, or as a protected tenant with statutory rights.


APR is due at 100% if:

  • The person who owned the land farmed it themselves
  • The land was occupied by someone else on a short term grazing licence
  • It was let on a tenancy that began on or after 1 September 1995, or there was a surrender and re-grant of an old AHA tenancy after 1 September 1995
  • A property owned before 10 March 1981 would have qualified under Schedule 8 of the Finance Act 1975 if it had been transferred before that date
  • The person had no right to vacant possession between 10 March 1981 and the date of the current transfer (e.g. Company AHAs)

Relief will be due at a lower rate of 50% in any other case. This commonly includes land let on Agricultural Holdings Act 1986 tenancies which commenced after 10 March 1981.

APR is usually only discussed on a death, when the asset is passed down to the next generation. APR doesn’t stop all tax being paid but with planning, it can be a great help to reduce the amount of tax paid on transfer. Other taxes to consider are Capital Gains Tax which should be planned for at the same time.

Non-traditional farmers have been buying land in recent history partly due to APR. This is not the only reason they are buying land but it has helped support the land market in the last 20 years.

Brexit is likely to reduce farm income with tariffs on products exported and allowing global farmers to potentially sell their products into this country from parts of the worlds that have cheaper production costs. Reducing income and profit for farmers could result in the countryside being farmed by larger scale farmers to take advantage of economies of scale.  If APR stays in its current form, this might encourage landowners to buy more land.

APR is seen as a government support for landowners. In the past it has not been under pressure to be reduced or removed. With a change in government, there may be more demand again for it to be reviewed, although a loss of income and profit from farming by Brexit may make this a moot point.

APR is closely linked with BPR (Business Property Relief). BPR has the same benefits and relief for assets used by a business, but rarely is a residential property solely used for business purposes. If APR was to be reduced or removed, APR would cover land used for farming but it would be unlikely to cover most farmhouses or cottages on a modern farm.

If you have any additional questions, or would like some advice, please contact your local Carter Jonas office.

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@ Chris Turner
Christopher Turner
01962 833374 email me about Christopher

Christopher is part of the rural team, carrying out management and professional services for private clients in the Newbury area. He specialises in the management of rural countryside estate, providing strategic and day to day management for various estates in Berkshire, Hampshire and Wiltshire. Chris also carries out professional work ranging from sales, purchases, lettings and valuations of country properties to advising on planning applications and entry into countryside grants for farmers.

I can provide advice on: