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What Is IHT Agricultural Property Relief?

What Is IHT Agricultural Property Relief?

Mike Wakeford

What Is IHT Agricultural Property Relief?
HMRC’s notice that refers to this relief has recently been updated to remove the word 'intensively' from the end of the following sentence: 'Agricultural property that qualifies for Agricultural Relief is land or pasture that is used to grow crops or to rear animals.

There are a number of reliefs available that can reduce liability to IHT. Of most interest to farmers is the Agricultural Property Relief (APR). Relief is available at a rate of 100% or 50% depending on who farms the land and how long the land has been owned.
The APR can be claimed on assets including:

  •  farming land or pasture that is used to grow crops or to rear animals; and

  • working farmhouses, farm workers’ cottages, barns and stud farms. 

  • There is no agricultural relief for farm equipment, but the equipment may qualify for another relief known as business relief. 

Who IS APR avalible for?
The APR is available for working farms in the UK, Channel Islands, the Isle of Man or the European Economic area. It is important to note that the relief is based on the agricultural value if the land. For example, a farmhouse is valued as if it could only be used for agricultural purposes, rather than open market value. The valuation of farmhouses can often be the subject of debate.
It is important to ensure that any claim for APR is realistic as HMRC’s refusal to accept an APR claim could result in a significant amount of IHT being due together with the possible levy of penalties. There can also be issues where the faming business has diversified into non-farming activities such as wind farms, holiday lettings and farm shops.

Contact Our Specialist Tax Team
Contact our tax team today for personalized advice tailored to your specific needs. We'll guide you through the process, ensure a realistic APR claim, and help you minimize tax liabilities.