As solicitors at Blackstone Solicitors, we understand that claiming Agricultural Property Relief (APR) can be a complex process. To help you navigate this, we’ve identified the top five common mistakes farmers make when claiming APR and how to avoid them. Let’s dive in.
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- Misunderstanding What Qualifies as Agricultural Property
One of the most common mistakes is misunderstanding what qualifies as agricultural property. APR applies to the agricultural value of land and buildings used for farming. This includes:
- Agricultural land and pasture
- Farmhouses, cottages, and buildings used for agricultural purposes
- Woodlands occupied with agricultural land
- Buildings used for rearing livestock or fish
However, not all property associated with a farm qualifies. For example, farm equipment, machinery, and harvested crops do not qualify for APR. Additionally, buildings must be of a nature and size appropriate to the farming activity. A farmhouse must be proportionate to the size of the farm and used as part of the agricultural operation
- Failing to Meet Ownership and Occupation Requirements
To qualify for APR, the property must meet specific ownership and occupation requirements. The property must have been owned and occupied for agricultural purposes for a minimum period before the transfer:
- Two years if occupied by the owner, their spouse, or a company controlled by them.
- Seven years if occupied by someone else
Failing to meet these requirements can result in the loss of APR. It’s crucial to ensure that the property has been used for agricultural purposes throughout the ownership period. This means that the land and buildings must be actively used for farming activities.
- Incorrectly Valuing the Property
Another common mistake is incorrectly valuing the property. APR applies to the agricultural value of the property, not the market value. The agricultural value is often lower than the market value, especially if the land has development potential. For example, land with planning permission for residential development will have a higher market value than its agricultural value
It’s essential to obtain a professional valuation to determine the correct agricultural value of the property. This will ensure that you claim the appropriate amount of relief and avoid any disputes with HM Revenue and Customs (HMRC).
- Overlooking the Impact of Recent Changes
The government has announced changes to APR that will come into effect from 6 April 2026. These changes include:
- Relief Cap: The 100% relief will only apply to the first £1 million of the agricultural value of your property. Any value above this threshold will receive 50% relief, and the remaining value will be subject to IHT at a rate of 20%
- Combined Allowance: The £1 million cap applies to the combined value of agricultural and business property. This means if you have business assets that qualify for Business Property Relief (BPR), they will count towards the £1 million limit.
- Non-Transferable Allowance: The £1 million allowance is not transferable between spouses or civil partners. Each person has their own £1 million limit, so careful planning is needed to ensure no allowance is wasted.
Failing to consider these changes can result in unexpected tax liabilities. It’s important to review your estate plan and make any necessary adjustments to account for the new rules.
- Not Seeking Professional Advice
Finally, one of the biggest mistakes is not seeking professional advice. APR is a complex area of tax law, and the rules can be difficult to navigate. A professional advisor can help you understand the requirements, ensure that you meet the qualifying criteria, and maximise the relief available.
At Blackstone Solicitors, we have extensive experience in helping farmers with their estate planning and APR claims. We can provide tailored advice to suit your individual circumstances and help you avoid common pitfalls.
Conclusion
Claiming Agricultural Property Relief can be a complex process, but by avoiding these common mistakes, you can ensure that you maximise the relief available and minimise your tax liabilities. Here’s a quick recap of the top five common mistakes:
- Misunderstanding what qualifies as agricultural property
- Failing to meet ownership and occupation requirements
- Incorrectly valuing the property
- Overlooking the impact of recent changes
- Not seeking professional advice
If you have any questions or need help with your APR claim, don’t hesitate to get in touch with us at Blackstone Solicitors. We’re here to support you every step of the way.
We have a proven track-record of advising upon all aspects of private client work. We will guide you through the process and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.to incorporate, what kind of ownership
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It is important for you to be well informed about the issues and possible implications of drafting a Will and setting up a Trust. However, expert legal support is crucial in terms of ensuring a positive outcome to your case.
To speak to our Private Client solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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