The law and practice referred to in this article or webinar has been paraphrased or summarised. It might not be up-to-date with changes in the law and we do not guarantee the accuracy of any information provided at the time of reading. It should not be construed or relied upon as legal advice in relation to a specific set of circumstances.
What is Agricultural Property Relief?
Agricultural Property Relief (APR) is an inheritance tax relief that can reduce the amount of tax payable on agricultural property. To qualify for this relief there must be agricultural land occupied for agricultural purposes. A minimum period of ownership of either two or seven years must also be met, depending on who is farming the land.
The rules as to what constitutes agricultural land are complex, but in general the land must be used to grow crops or to rear animals. In some cases it can also include farm buildings, farm cottages, farmhouses and woodland.
What are the restrictions on agricultural property relief?
APR is restricted to the agricultural value of the land and buildings. This means that where the open market value is higher than the agricultural value, APR will not cover the full value of the land or buildings. This is often the case when dealing with farmhouses, as the agricultural value is often only 60% - 70% of the open market value.
Currently there is no limit on the amount of APR that can be claimed. The rate of 100% relief can apply to the agricultural value of all agricultural property if the deceased owned the land and farmed it themselves; the land was let on short term grazing licence or was let on a tenancy. In other cases a rate of 50% may apply.
What is changing?
From 6 April 2026 it will only be possible to claim 100% relief on the first £1 million of agricultural property. The rate of 50% will apply to the value of any agricultural property thereafter.
For estates where there is both agricultural property and business property the £1 million limit will apply to the combined value of both agricultural and business assets.
How can we help?
When dealing with an estate that includes any agricultural property it is important that you seek specialist advice to ensure that the best case is put to HMRC, and that the maximum allowances are claimed. At Stone King we have in-house specialists who are equipped to help and advise you on what is best for your particular case. If you are inheriting, or leaving agricultural land to someone in your Will, get in touch with our team today for advice you can trust.
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