SVM112050 - IHT Agricultural Property Relief: Agricultural Property, Agricultural Value and Agriculture

Agricultural property

Section 115(2) IHTA 1984

This subsection defines agricultural property. Morritt LJ in Starke v IRC [1995] STC 689 split the definition into three parts. It means

1 - agricultural land or pasture.

2 - woodland and any building used in connection with the intensive rearing of livestock or fish if

  • the woodland or building is occupied with agricultural land and pasture and
  • the occupation is ancillary to that of the agricultural land or pasture, and also includes

3 - such cottages, farm buildings and farm houses, together with the land occupied with them, as are of a character appropriate to the property (in other words, the agricultural land or pasture).

For further information see  IHTM24030

Section 115(5) IHTA 1984

For a transfer to attract agricultural relief it must be attributable, at least in part, to the agricultural value of agricultural property that is situated in the United Kingdom at the time of the transfer of value

For transfers between 22 April 2009 and 5 April 2024 it also applied to agricultural property situated in the Channels Islands, the Isle of Man or a state other than the United Kingdom within the European Economic Area. See IHTM24256.

From 6 April 2025 some former agricultural property now subject to environmental land management agreements may also qualify for agricultural relief – see IHTM24300 onwards.

The Valuation Office (VO) is responsible for deciding what constitutes agricultural property within the definition in section 115(2) IHTA 1984. See SVM112170 For further information. See IHTM24050 onwards.

Agricultural value

section 115(3) IHTA 1984

This is defined as the value the agricultural property would have if it were subject to a perpetual covenant prohibiting its use otherwise than as agricultural property. Consequently the agricultural value may be less than the open market value of the property because of development value or mineral value.

The question of what constitutes ‘agricultural value’ is a matter for the VO. See SVM112170.

Agriculture: section 115(4) IHTA 1984

‘Agriculture’ includes cultivation and the support of livestock for human consumption and setting aside fallow land.

Horses

It also includes the breeding and rearing of horses on a stud farm and the grazing of horses in connection with those activities. ‘Farm buildings’ includes buildings used for these activities.

Grazing

Even where no stud farm is involved, grazing (whether of the company’s own or other horses) should not be regarded as a non-agricultural use where it is only occasional or a small part of an overall farming operation.

Buildings

In practice, buildings used for intensive mushroom cultivation and glasshouses used for growing tomatoes may also be regarded as agricultural property.

See  IHTM24090 onwards.

Additional Guidance: SVM150000