Agricultural Property Relief is a popular topic in the ACCA Advanced Tax, ICAEW BPT, ATT and CTA exams

It is available on agricultural land and buildings only located in the UK, Channel Islands, Isle of Man, and the European Economic Area. It makes the asset tax free for inheritance tax.

APR will cover the buildings such as the barn, milking shed and animal enclosures. With regard to the farmhouse, this is only eligible for APR if it is of the character expected of a farmhouse and used by someone actively involved in the day-to-day farming activities. So, a city slicker who buys a farmhouse as a weekend hideaway will not get APR.

Owner occupied farms need to be owned for 2 years while tenanted farms need to be owned for 7 years to qualify for the APR.

Usually, APR is available at a rate of 100% but is restricted to 50% if the lease started before 1 September 1995 and has more than 2 years left to run on the lease.

It is important to remember that the relief is only available on the agricultural property value of the land and buildings not the full market value.

Business property relief can be claimed on the difference between the agricultural value and the full market value of the land and buildings and the other business assets like plant and machinery.

With regard to lifetime gifts, APR is only available is the farm is still owned at the date of death.

Alternatively, if ALL the sale proceeds are reinvested in replacement agricultural property within 3 years, the donee can still claim APR on the donor’s death. 

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