Agricultural Property Relief (APR) is one of the most valuable inheritance tax (IHT) reliefs. If the conditions for APR are met, APR can help prevent IHT from being a burden on farming families and may help avoid the sale of a main asset from which the family draws an income.
There are complex rules as to what qualifies for APR but, in brief, “Agricultural Property” means and includes agricultural land or pasture, woodland occupied with agricultural land or pasture, buildings used in connection with the intensive rearing of livestock or fish, breeding or rearing of horses on a stud farm, farm cottages, farm buildings and farmhouses. Various tests, (including ownership and occupation tests for APR) have to be satisfied and the rate of IHT available depends upon certain criteria. The amount of the value attracting the relief may also be limited.
Difficulties and complications can arise in relation to let land, Farm Business Tenancies, and where a farmer diversifies their business away from mainstream agriculture (e.g. quad bike racing/car boot sales/caravan and camping facilities). Many landlords wish to protect their access to APR based upon the underlying agricultural use of let property.
APR and Business Property Relief (BPR) can work hand in hand and, sometimes, BPR may be applied to soak up the excess market value premium over the often lower agricultural value.
HMRC closely assess the availability of APR for Farmhouses and look at “the character appropriate” test together with legal cases on the definition of a Farmhouse. Farms owned in Partnership are also carefully assessed by HMRC.
Determining the value of APR is complex and requires, amongst many other considerations, detailed analysis of legislation and case law. We can advise and assist our clients with claims for APR and we can carry out a computation, in advance of death, in order to ascertain whether or not agricultural assets may qualify for this important IHT relief. Should you wish to discuss this further, please do not hesitate to contact one of our experienced Solicitors.
