12 Days of Christmas - Day 8: Maids a milking
What is Agricultural Property Relief?
Agricultural Property Relief (APR) is a form of tax relief that allows you to claim relief on land that can be used for agricultural purposes, (crops or livestock) and associated buildings such as barns, outbuildings and houses used in connection with the land.
How does APR work?
To receive APR, the land or buildings must have been owned for at least two years prior to transfer. There is one exception to this rule - if the asset is inherited from a spouse and they too have owned it for less than two years, this scenario is added to that of the late spouse. If the combined period of ownership exceeds two years then APR relief should be available. If the owner does not occupy the property (land or buildings) which is the case usually with a Farm Business Tenancy) they need to have owned it for seven years in order to qualify for APR.
What qualifies for Agricultural Property Relief?
Typically, APR is available for:
- Land used for crops or livestock
- Farmhouses are included as long as they have been used as a base for operations and not just a house.
- Cottages that have been lived in by someone/family working on the land and are under a tenancy agreement.
APR is not available for:
- Machinery and farming equipment
- Harvested crops
- Derelict buildings/ outbuildings on land
How much APR is available?
Depending on how the property is owned, relief is due at either 50% or 100%.
Agricultural Property Relief is a powerful form of tax relief and all options should be explored as it can provide relief of up to 100% after you pass away. If your assets qualify for APR there’s no reason why your maids-a-milking shouldn’t be able to continue to do so following your death.
As with all areas of taxation, however, Agriculture Property Relief is a complex area and expert advice should be sought on estate planning.
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Peter has specialised in farms and rural land since doing his articles at Burges Salmon. He has worked in the Midlands for the last 25 years, advising on all aspects of rural property and farm partnerships.