Agricultural property relief (APR)

Produced by Tolley

The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Agricultural property relief (APR)
  • What is agricultural property relief (APR)?
  • Definition of agricultural property
  • Question 5 ― give a detailed description of the day-to-day farming activities carried out on the land throughout the seven years prior to the date of transfer (or the period of ownership if less than seven years)
  • Question 16 ― give a full description of any farm buildings from which agricultural relief is deducted stating who was using them and for what purpose
  • Stud farming
  • Rates of APR
  • Conditions of ownership and occupation
  • Agricultural property owned by companies

Agricultural property relief (APR)

What is agricultural property relief (APR)?

APR is given by virtue of IHTA 1984, s 116:

‘Where the whole or part of the value transferred by a transfer of value is attributable to the agricultural value of agricultural property, the whole or that part of the value transferred shall be treated as reduced by the appropriate percentage.’

The ‘appropriate percentage’ is either 50% or 100%, with the rate of relief depending on the nature of the property, the interest held and whether certain conditions are met.

Definition of agricultural property

APR applies only to agricultural property, which is defined in IHTA 1984, s 115(2) as follows:

‘“Agricultural property” means agricultural land or pasture and includes woodland and any building used in connection with the intensive rearing of livestock or fish if the woodland or building is occupied with agricultural land or pasture and the occupation is ancillary to that of the agricultural land or pasture; and also includes such cottages, farm buildings, and farmhouses, together with the land occupied with them, as are of a character appropriate to the property’

Examples of activities that are deemed to be agriculture are:

  1. cultivation to produce food for human and animal consumption

  2. use to support livestock kept to produce food or other products such as wool

  3. use to support farm working animals

  4. nurseries growing seeds and plants to produce flowers, trees and turf, as well as food crops

  5. breeding of horses

  6. hop growing

  7. short rotation coppice

  8. energy crops

Examples of activities that are not deemed to be agriculture include:

  1. music festivals

  2. diversified activities eg paint balling

  3. letting of cottages and barns

  4. the provision of farm contracting services

  5. wind farms

Woodland qualifies as agriculture when the activity is ancillary to the main farming operation and the wood is used on the farm. The size of the farm is not restrictive. In the case of Golding APR was allowed on a farmhouse that was ‘character appropriate’ to only 16 acres of land.

In order to

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