What is deemed to be Agricultural Property?
You can pass on some agricultural property free of Inheritance Tax, either during your lifetime or as part of your will.
Agricultural property that qualifies for Agricultural Relief is land or pasture that is used to grow crops or to rear animals. It also includes:
Land not currently being farmed under a crop rotation scheme
The following do not qualify for Agricultural Relief:
Farm equipment and machinery
Property subject to a binding contract for sale
Rates of Agricultural Relief
Agricultural Relief is due at 100% if:
Relief is due at a lower rate of 50% in any other case.
A property may be owner occupied or let, but it must be part of a working farm in the:
Isle of Man
European Economic Area
Period of Ownership or Occupation
The property must have been owned and occupied for agricultural purposes immediately before its transfer for:
Farmhouses and Cottages
Buildings must be of a nature and size appropriate to the farming activity that is taking place. The property is valued as if it could only be used for agricultural purposes. Any value over and above this ‘agricultural value’, such as the market price of a country residence, does not qualify for Agricultural Relief.
A cottage or farmhouse must be occupied by someone employed in farming or:
Business Property Relief
You cannot claim Business Property Relief on the value of an asset that you have already claimed Agricultural Relief on. However, a farming business may find that Business Property Relief is available on the value of an asset not fully covered by Agricultural Relief, if the conditions are met.
The Financial Conduct Authority does not regulate Inheritance Tax planning.
Tax treatment varies according to individual circumstances and is subject to change.
Estate Planning is not regulated by the Financial Conduct Authority.