IHTM24141 - The rate of relief: Vacant possession and the higher rate of relief example of occupation by a company
Where an individual is the sole owner of agricultural property (IHTM24030) and occupies the land for agricultural purposes as a sole trader (IHTM24151) they will be entitled to give vacant possession of the land and will qualify for relief at the higher rate (subject to the limitation of higher rate relief from 6 April 2026 – see IHTM25500).
A beneficial joint tenant or tenant in common (in Scotland, a joint owner or owner in common) is regarded under IHTA84/S116 (6) as having the right to vacant possession if his interest in the property and the similar interests of all the other co-owners together carry that right.
Before s155 Finance Act 1995 introduced the higher rate of relief on tenancies created on or after 1 September 1995 (IHTM24240) it was not uncommon to see it claimed that an agricultural tenancy (IHTM24210) did not exist on cases where the land was occupied
- by a partnership (whether the deceased was a member or not), or
- by a company controlled by them, or
- by a third party
So vacant possession was obtainable and relief at 100% rather than 50% was sought - In any such case you should investigate whether an agricultural tenancy did exist, unless you have evidence that the land was subject to grass keep lettings (IHTM24142) for less than a year at a time.
Evidence of tenancies may be obtainable from Articles of Partnership, from the files of previous owners, for examples a predeceased spouse or civil partner (IHTM11032), from deductions for rent in business accounts, or returns of rental income in the deceased's Income Tax papers.