Agricultural, Business and Heritage Property Relief
Author: Chris Erwood CTA, ATT, TEP
Agricultural, Business and Heritage Property Relief
Agricultural, Business and Heritage Property Relief is an expert and detailed guide to the rules of inheritance tax relief for business, farm, woodland and heritage property. This book considers the approach to the typical situations that are likely to be encountered in practice and provides clear guidance on how to harness the relief, its preservation, compliance aspects and practical tips. Most importantly it contains numerous examples of the many pitfalls and bear traps that abound in this complex area of tax law.
It covers topics and questions such as:
- What constitutes agricultural property?
- The farmhouse v the grand home
- What is treated as business property?
- The FHL issue
- How woodlands relief operates and when it should be considered
- Property that attract and the practical benefits of heritage relief
- How the reliefs interact
- How the reliefs may be lost
- Planning points
- Specific specialist areas, ie. heritage maintenance funds.
It examines both legislation and case law in detail whilst cross referencing to HMRC published guidance and pertinent HMRC manuals. It provides in excess of 100 detailed worked examples which illustrate and explain how the principles of the reliefs are applied in day to day practice.
This is a very fluid area which has assumed increasingly significant importance for estates succession in the context of IHT planning. As a consequence understanding the availability, access to and operation of these headline reliefs is critical. It is considered that this is the most comprehensive and detailed work entirely focused on all four reliefs on business, agricultural property tax and heritage property relief available in the market and for those practicing in this area, it has long since been seen as the 'reference bible'.
Agricultural property relief and business property relief – Autumn Budget summary note
It has been announced that agricultural property relief (APR) and business property relief (BPR) will be reformed to take effect from 6 April 2026. The 100% relief which is currently available on all qualifying assets without any limit on value will be available only on the first £1m of assets (in total) with a rate of 50% for assets above this limit.
It will apply to transfers on death and in the seven years before death and will not be transferable to the spouse.
There will be a consultation as to how the rules will apply to exit and ten year charges for trusts. However, trusts set up by the same settlor before 30 October 2024 will each have a £1m allowance and trusts set up by the same settlor after this date will share the £1m allowance between them.
BPR on shares which are quoted on a recognised stock exchange but treated as unquoted (such as AIM) will be 50% from this date and will not be able to benefit from 100% relief.
For both of these measures, anti-forestalling provisions mean that the new rules will apply for lifetime transfers on or after 30 October 2024 if the donor dies on or after 6 April 2026. This will limit planning before the new rules are introduced.
This could have a significant impact on many clients. An individual with shares in a personal company worth £4m which are eligible for BPR will go from a situation where no IHT is payable on those shares to a situation where the BPR available would be £1m plus (50% x £3m) so leaving £1.5m of value exposed to IHT. The cost would be £600,000.
It is likely to encourage clients to consider passing on assets to the next generation and they may wish to consider doing this before April 2026 when the rules are introduced although the anti-forestalling provisions are unhelpful in that respect. This will give us some time to consider the best options for clients.
Agricultural property relief: environmental land management
From 6 April 2025, APR will be extended to cover land managed under an environmental agreement with the UK government, devolved governments, public bodies, local authorities or other approved bodies.
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