What is Agricultural Property Relief (APR) and when does it apply? What conditions must be met to claim it?

Subscribers, see IHT Agricultural Property Relief for your detailed version of this guide.

This is a freeview 'At a glance' guide to Agricultural Property Relief (APR).

At a glance

Agricultural Property Relief (APR) is a relief from Inheritance Tax (IHT).

APR is given on the agricultural value of UK agricultural property which has been:

  • Occupied by the transferor for the purposes of agriculture for two years ending with the date of the transfer.
  • Owned by the transferor for seven years ending with the date of transfer and occupied throughout by them or another for the purposes of agriculture. In practice, this will apply to let property.

For transfers of value prior to 6 April 2024, APR also applied to property situated in the Channels Islands or Isle of Man or a state other than the UK which is within the European Economic Area (EEA) at the time of the transfer of value.

APR is given at one of two different rates: 100% or 50%.

100% relief applies if:

  • You have vacant possession of the property because you occupy it yourself or you have a right to vacant possession within 12 months under the terms of any lease or licence.
  • The land is let and the tenancy started on or after 1st September 1995.
  • By concession: the land is let and certain conditions are met as to vacant possession. See IHT Agricultural Property Relief.
  • Under special rules for land let before 10 March 1981 and on the surrender and re-grant of pre-1 September 1995 protected tenancies. See IHT Agricultural Property Relief for full details.

50% relief is available in other cases.

APR can be available on shares in a company.

What is 'agricultural property'?

Agricultural property means agricultural land or pasture and also includes:

  • Woodlands and buildings used in the intensive rearing of animals if they are being used with agricultural land or pasture.
  • Grazing land where you are responsible for the upkeep.
  • Cottages, farm buildings and farmhouses, and any land occupied with them, if they are of a character appropriate to the property (see The Farmhouse below for more details).

What are ‘agricultural purposes’?

There is no definition of what use qualifies as for the 'purposes of agriculture'. It includes general farming and the rearing of animals including horses on a stud farm. 

Each part of the property must be looked at separately, such as land, farmhouse, farm cottages and other buildings.

HMRC provides examples of what qualifies as 'for agricultural purposes' in their IHT manual, see IHT Agricultural Property Relief.

What is the value of agricultural land?

  • The agricultural value of the property is the value that would apply if the property were subject to restrictions that prevent its use otherwise than as agricultural property. 
  • Agricultural land which has been granted planning permission is valued for APR as if that planning does not apply. The agricultural value is usually lower than market value in these circumstances so APR may not apply to the whole value of the land. IHT Business Property Relief (BPR) may need to be considered instead.

Successive transfers

APR can be available on successive transfers, where the two-year occupation or seven-year ownership conditions are not met in isolation. See IHT Agricultural Property Relief.

Land held outside of a farm partnership or company

There are particular considerations to be addressed when land is held outside of a farm partnership or company to ensure maximum relief is available. See IHT Agricultural Property Relief.

In some circumstances, the occupation of land held personally and used by a farming company can be deemed to be occupation by the owner. This can allow assets to qualify for APR sooner than would otherwise be the case. See IHT Agricultural Property Relief.

Replacement property

There are special rules which apply where the property that qualifies for APR is replaced within the two years before death. See IHT Agricultural Property Relief.

Chargeable Lifetime Transfers

Where a lifetime gift is made and it is subject to a lifetime Inheritance Tax charge (a Chargeable Lifetime Transfer), for example, because it is a transfer to a trust and APR is claimed on the gift:

  • APR will be clawed back if the person making the gift dies within seven years and the trust no longer has the assets.

The Farmhouse

Where APR includes cottages, farm buildings and farmhouses they must be of a character appropriate to the property, that is proportionate in size and nature to the requirements of the farming activities conducted on the agricultural land in question (Starke and Another v IRC [1995]).

There are various factors to be applied when determining whether a farmhouse is of a 'character appropriate’. See IHT Agricultural Property Relief for more details.

If APR does not apply then BPR may apply instead, if the conditions for relief are met.

Farm cottages can qualify for APR in a wide set of circumstances. There are particular valuation rules which apply in such cases. See IHT Agricultural Property Relief.

Leaving the farm to a spouse

When a spouse or civil partner inherits property eligible for APR they take over the deceased spouse's holding period for those assets.

There are specific conditions that must be met for this to apply. See IHT Agricultural Property Relief for the conditions and benefits.

Useful guides on this topic

IHT Agricultural Property Relief
What is Agricultural Property Relief (APR)? When does it apply? What are the conditions and restrictions of the relief?

IHT Business Property Relief
A guide explaining what is Business Property Relief, when it can apply and pitfalls and planning points.

IHT: Development land
When is the development of land a business for the purposes of Business Property Relief (BPR)?

Farming: Tax Overview
What is farming? What are the tax consequences and tax considerations of farming? What are the features of agricultural tenancies? What expenses can farmers claim for tax purposes? Are there special tax and accounting rules for farmers? What are the VAT rules for farmers?

Farming: At a glance
What is farming? What are the tax consequences and tax considerations of farming? What expenses can farmers claim for tax purposes? Are there special tax and accounting rules for farmers? What are the VAT rules for farmers? What are the tax consequences of diversification? 


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