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

HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
, see all updates

Agricultural Tenancies Act 1995: Tenancies excluded from the 1995 Act

Certain categories of agricultural tenancy are excluded from the ATA 1995 and are therefore not farm business tenancies. These are

  • a tenancy of an agricultural holding beginning before 1 September 1995,
  • a tenancy granted pursuant to a written contract of tenancy entered into before 1 September 1995 and in terms that the 1986 Act is to apply,
  • succession tenancies granted under the statutory succession scheme for agricultural holdings set out in AHA1986/PartIV where two successions have not yet taken place,
  • tenancies granted to tenants under the ‘Evesham Custom’, which is where a new tenant is accepted and takes on the terms and conditions of the previous tenancy, and variations to an existing tenancy to which the AHA 1986 applies. Under the Regulatory Reform (Agricultural Tenancies) (England and Wales) Order 2006 it was made easier to create a new tenancy under the terms of the 1986 Act by varying the terms of an existing tenancy.

An express surrender and regrant will of course result in a farm business tenancy - and relief at the higher rate.

Example:

A owns 225 acres which have been let under an oral tenancy since 1993 to B. He also has vacant possession of a further 100 acres.

In 1996 he relinquishes vacant possession of 50 acres and adds them to the land tenanted by B. In 2001 he does the same with the balance.

The reasons for the availability of relief at the higher rate in such a situation are complex. You need to distinguish between the farm business tenancy as defined by S.1(1) Agricultural Tenancies Act 1995 and the tenancy created on or after 1 September 1995. S.2 ATA 1995 details tenancies which cannot be farm business tenancies, and s.4 sets out those special instances where the AHA 1986 will apply in relation to post-ATA 1995 tenancies. If there is an implied surrender and regrant (see s.4(1)(f) ATA 1995) on or after 1 September 1995 then the resulting new tenancy would lose the previous security of tenure were it not for the “saving” provisions of s.4(1)(f).

So, on the one hand, we have a tenancy which is not a farm business tenancy and which has the protection of the AHA 1986 - despite being created on or after 1 September 1995 - but which on the other hand qualifies for relief at the higher rate by virtue of IHTA84/S116 (2)(c).