Inheritance Tax On Agricultural Property

Agricultural Property Relief
There is a specific relief that relates to certain agricultural property situated in the UK, Channel Islands, Isle of Man and in the EEA (European Economic Area). Qualifying agricultural property can be passed without inheritance tax as a lifetime gift or upon death.

How To Qualify For Agricultural Property Relief

Property may qualify for agricultural relief if it is used intensively to grow crops or rear animals. The following also qualify:

  • growing crops
  • trees that are in coppice rotation
  • stud farms
  • land that is not currently farmed under the Habitat Scheme or crop rotation
  • the value of milk quota associated with any land qualifying for relief
  • certain agricultural shares and securities
  • farm buildings, cottages and farmhouses

The following items are excluded:

  • farm machinery and equipment
  • harvested crops
  • derelict buildings
  • property subject to a binding contract of sale
  • livestock

Farm buildings, farm cottages and farmhouses must be of nature and size appropriate to the activity of the farm.

Agricultural relief is only given on the assumption that the property can only be used for agricultural purposes. This is called the ‘agricultural value’. IF the market value exceeds the agricultural value, there is no relief on the excess.

In order to qualify, a farmhouse must be occupied by someone who is employed in farming, a retired employee or the spouse or civil partner of a deceased employee. They must either be a tenant under a lease that was granted as part of their former employment contract or be a “protected tenant” who has statutory rights.

In order to qualify for the relief, the property must have been owned and occupied for agricultural purposes for two years before the inheritance tax event, or seven years if not occupied by the owner or their spouse.

A mortgage or secured debts on the property will reduce the amount of the value qualifying for agricultural property relief.

Do you have any questions? Assured Wealth and Estate Planning Solutions can advise on a number of elements of inheritance tax matters.  Talk to one of our Warrington Estate PlanningKnutsford Estate PlanningLiverpool Estate PlanningAltrincham Estate PlanningWilmslow Estate Planning or Manchester Estate Planning specialist today.

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