Agricultural buildings

By Tolley in association with Julie Butler

The following Owner-Managed Businesses guidance note by Tolley in association with Julie Butler provides comprehensive and up to date tax information covering:

  • Agricultural buildings
  • Agricultural buildings allowances (ABAs)
  • Definition of plant not building
  • Capital allowances planning
  • Agricultural buildings let out
  • Letting out cottages and converted agricultural buildings
  • The importance of repairs and improvements to agricultural buildings
  • Was the agricultural building there before and the entity
  • IHT considerations
  • Redundant agricultural buildings
  • Permitted development rights and agricultural buildings
  • Radical changes to planning permission
  • Action plan

Agricultural buildings allowances (ABAs)

Finance Acts 2007 and 2008 phased out ABAs. Farmhouses were historically eligible for ABAs. Prior to 5 April 2011 ABAs were available to owners or tenants in respect of capital expenditure on agricultural buildings and works, including farm buildings, fences, drainage, power supplies etc.

Many would argue that the abolishment of ABA has been very positive for the farming community because instead of looking towards a ‘lazy 4%’ on the ABA there has been a move towards looking towards 100% repair or 100% capital allowances. Money spent on improvements can also be very efficient for capital gains tax (CGT) purposes. It could well be that the farmer has sold part of the farm for a development, a small development or perhaps there will be disposals under the new permitted development rights of residential property where barns are converted to residential. There is therefore scope to rollover gains into farm improvements bringing further to the limelight the whole review of taking advantage of development opportunities and then tax efficiently repairing and improving the farm with a strong focus on the farm buildings.

One of the features of FA 2008 has been the ability to claim capital allowances on ‘integral features’ of a building. This identification of ‘integral features’ (ie long-life assets) increases the need to review a building and check for fixtures and features. This can be complicated and such identification is easier carried out in advance when costings are available. Tax planning consideration is also given to plant used in the building.

See the Agricultural property relief (APR) guidance note. See also Simon’s Taxes Division I7.3 (subscription sensitive).

Definition of plant not building

A large amount of expenditure in relation to a modern building relates to items of plant and machinery. The farmer or landowner may identify such expenditure and claim

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