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An at a glance freeview guide to Agricultural Property Relief (APR).

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

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:

APR is given at two rates: 100% and 50%.

100% relief applies if:

50% relief is available in all other cases.

What is agricultural property?

Agricultural property means agricultural land or pasture and also includes:

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 for full details.

What is the value of agricultural land?

Replacement property

There are special rules which apply where property which 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 discretionary trust, and APR is claimed on the gift:

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.

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 which must be met for this to apply for APR. See IHT Agricultural Property Relief for the conditions and benefits.

Links to our useful guides:

IHT Agricultural Property Relief
Agricultural Property Relief (APR) is a relief for Inheritance Tax (IHT). This guide provides an outline of APR with links to case law.

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

IHT: development land
Whether the development of land and buildings is ‘dealing in land’ is often considered with respect to income tax and capital gains tax, however the IHT implications should not be overlooked.