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HMRC internal manual

Inheritance Tax Manual

Agricultural property: Buildings used for the intensive rearing of livestock or fish

Buildings used for the intensive rearing of livestock or fish qualify for relief only if they come within the definition of agricultural property (IHTM24030), that is where

  • they were occupied (IHTM24070) with qualifying agricultural land or pasture, and
  • the occupation was ancillary to that of the land or pasture.

So, agricultural relief may not apply in situations where there are buildings used for intensive farming activities such as egg production or breeding pigs and there is little or no land. Business relief (IHTM25131) may be available as an alternative in the case of a business which owns and occupies the buildings and land.

The case of Richard Williams (Personal representative of Mary Philomena Williams deceased) v HMRC [2005] (SpC500), which came before the Special Commissioner in June 2005, provides some helpful guidance on this issue. The deceased owned a poultry farm, comprising three broiler houses used for the intensive rearing of chickens and around 7 acres of land. The Commissioner was asked to decide whether the broiler houses were of a character appropriate to the qualifying agricultural land in the estate. He decided that the broiler houses were properly described as farm buildings but they would only pass the test in IHTA84.S115(2) if they were occupied as an ’add-on’ to or as a subsidiary part of the larger agricultural operation carried out on the other land with which they were occupied.

The Commissioner’s view was that the broiler houses dominated that part of the land they occupied and that there was no evidence of a wider agricultural enterprise on the remainder of the land being occupied. As a result, the occupation of the broiler houses could not be regarded as ancillary to that of the agricultural land. Nor were they of a character appropriate to the land and the claim of Agricultural Relief failed.

Buildings and land owned by the deceased/transferor and occupied by a partnership of which the deceased/transferor is a partner will qualify for business relief (IHTM26250), if it is due, at 50%. If the buildings and land are occupied by a business in which the deceased/transferor has no interest, business relief will not be available.

A fish breeding tank or pond may be regarded as a farm building for the purposes of relief, but a stream may not. A fish farm is not treated as agricultural property if the fish are reared for sport. Similarly the value attaching to fishing rights (IHTM24039) does not qualify for agricultural relief.