Agricultural Property Relief (APR) is a very favourable Inheritance Tax relief in the UK that can often be taken for granted.
There is frequent speculation amongst tax advisors concerning the longevity of APR as against BPR (Business Property Relief) and some believe that APR has a limited lifespan fuelled by the investment in agricultural property of individuals and organisations from a non-farming background in order to take advantage of this valuable relief.
So what is agricultural property?
The definition is quite wide and can include – agricultural land or pasture, as well as woodland and buildings used for rearing livestock or fish where occupation is ancillary to that of the agricultural land. Also included are cottages, farm buildings and farmhouse occupied with the agricultural land.
APR only applies to the agricultural value of the agricultural property and where the property satisfies the conditions for BPR it is APR that is given first and BPR may then be claimed in respect of the non-agricultural value.
BPR is given on the value of transfers of business property which includes a business or an interest in a business, such as a partnership share. Also included are holdings of unquoted shares and land, buildings, plant or machinery owned personally but used for a business carried on by a company of which you have control or by a partnership in which you are a partner.
There are ownership period requirements for both of these reliefs and the rate of relief can be either 50% or 100% which can make a significant difference to the Inheritance Tax liability attaching to the transfer of both agricultural property and business property in your lifetime or on death.
If you are not sure whether your property qualifies for relief or you would like any further information regarding any aspect of this article, please get in touch with a member of our agricultural team.
