Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
, see all updates

Occupation of farmhouses, cottages and farm buildings: Cottages

It is for you to decide whether a cottage which is temporarily vacant is being genuinely held for the purposes of agriculture (such as where one farm-worker has vacated and another is shortly to take up occupation) and should be treated as also satisfying IHTA/S117 (and would otherwise appear to satisfy IHTA84/S115 (2)). It will be a matter of fact and degree whether it remains ‘occupied for the purposes of agriculture’.

Farm cottages let to a person unconnected to the agricultural land that is subject to the transfer are unlikely to qualify for relief. The Upper Tribunal in HMRC v Atkinson and another [2011] UKUT 506 (TCC) gave the following example:

‘Suppose that a cottage, whilst remaining of a character appropriate to the agricultural land within the farm, is temporarily let for a period of, say, 1 year to a person having nothing to do with agriculture. The cottage would not then be occupied for the purposes of agriculture.’