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HMRC internal manual

Shares and Assets Valuation Manual

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

Agricultural property

s.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).


Relief is restricted to agricultural property situate in the United Kingdom, the Channel Islands, the Isle of Man and the European Economic Area.

The Valuation Office Agency (VOA) is responsible for deciding what constitutes agricultural property within the definition in s.115(2). See SVM112170 for references to the VOA.

Any question about whether land or buildings owned by a company are agricultural property should be referred to the Litigation and Technical Advice Team (LTAT).

In particular, if the VOA queries whether a house, cottage or buildings are of a character appropriate to land owned or tenanted by a company, you should refer to the LTAT via your Team Leader.

For further information see Chapter 24 of the Inheritance Tax manual at IHTM24050 onwards.

Agricultural value


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 (although business relief may be available instead - see example 4 at SVM112020).

The question of what constitutes ‘agricultural value’ is a matter for the VOA. SVM112170 sets out the procedure for references to the VOA.

Agriculture - s.115(4)

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


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.


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. Any other case involving grazing should be referred to the LTAT.


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

For further information, see Chapter 24 of the Inheritance Tax manual at IHTM24090 onwards.

  Additional Guidance: SVM150000