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AGRICULTURAL PROPERTY AND THE TAX MAN

In the age of barn conversions and agricultural diversification, the tax man has reaped some hefty rewards from many of the UK’s farming families. Yet many are still not aware of, nor are they taking advantage of, Agricultural Property Relief (APR).

APR is an inheritance tax relief based on the agricultural value of qualifying agricultural property when it is transferred, either in your lifetime or in a Will.

Provided the property is in the UK, Channel Islands or the Isle of Man, the following agricultural property may qualify for APR:

- growing crops
- woodland
- land not currently being farmed under crop rotation
- farm buildings, farm cottages and farmhouses
- some agricultural shares and securities

But beware. The following do not qualify for APR:

- farm equipment and machinery
- livestock
- harvested crops
- derelict buildings
- any property subject to a binding sale

And this is why careful planning with your agricultural accountant should take place at the earliest possible opportunity ………

To qualify for APR, the property must have been owned and occupied for agricultural purposes before its transfer for 2 years if occupied by the owner or their spouse or civil partner. And for 7 years if occupied by someone else, such as a farm labourer.

Cheshire accountants, Afford Bond Partner, Lindsay Beeston said: “Agricultural Relief is due at 100% if – as used to be the case - the person who owned the land actually farmed it themselves. But nowadays there are many tenant farmers in the UK. All is not lost though, if your farm was let on a tenancy that began on or after 1st September 1995, you would still qualify for 100% Agricultural Relief.”

It is always prudent to seek expert tax planning advice from a specialist agricultural accountant and to revisit this at least once per year. Personal circumstances often change and by carrying out regular ‘housekeeping’ on your finances, it is likely that the best use can be made of legitimate agricultural tax positions.

If you would like to talk to one of our agricultural accounting experts, please email Lindsay.Beeston@affordbond.com or complete the Contact Us form on our website