The Executive has introduced an extension to the present scope of Agricultural Assets Reduction to incorporate all environmental land control schemes, as a part of the Spring Finances.
It’s going to quilt, from April 6 2025, the Sustainable Farming Incentive, Nation-state Stewardship and different stewardship schemes and Panorama Restoration in England, in addition to the England Wooded area Advent Be offering and different identical schemes. The extension additionally applies to the remainder of the United Kingdom.
Farmers and landowners collaborating in those schemes shall be eligible for Agricultural Assets Reduction and exempt from related inheritance tax. Land controlled beneath an environmental settlement with, or on behalf of, the United Kingdom Executive, Devolved Administrations, public our bodies, native government, or authorized accountable our bodies will all be in scope for Agricultural Assets Reduction.
Defra stated the adjustments additionally take away a vital barrier to tenant farmers and landlords participating to go into schemes through eliminating the danger that tenants’ participation in schemes would alternate whether or not the land is eligible for Agricultural Assets Reduction.
The brand new coverage design will come with the next major options:
- Prolonged reduction shall be to be had for lifetime transfers and transfers at loss of life on or after April 6, 2025.
Reduction shall be to be had for land controlled beneath an environmental settlement with, or on behalf of, the United Kingdom Executive, Devolved Administrations, public our bodies, native government, or authorized accountable our bodies. - Reduction shall be to be had the place there may be an settlement in position for the environmental land control scheme on or after March 6, 2024. This comprises an settlement entered into earlier than 6 March 2024 if it stays in position on or after March 6, 2024.
- Reduction will proceed to be to be had the place an settlement has concluded if the land remains to be controlled in some way this is in keeping with that settlement.
- Reduction will handiest practice the place the land used to be agricultural land for a minimum of 2 years in an instant previous to the land use alternate. There is probably not a wish to display the land used to be used for agricultural functions and would have certified for agricultural belongings reduction earlier than land use alternate. HMRC will supply steering at the essential proof sooner or later.
- The prevailing protecting duration for agricultural belongings reduction is probably not restarted through land use alternate. This implies, as an example, if an owner-occupier had occupied agricultural land and used it for agricultural functions for two years or extra then changing a parcel of the similar land to environmental use won’t require the land to be held for an additional 2 years to qualify for reduction.
- The valuation of the qualifying land would be the marketplace worth of environmental land topic to the particular assumption of a restriction to its present use.
- In line with the present regulations, constructions utilized in reference to environmental land, together with farmhouses, will qualify for reduction the place that construction is desirous about, and that profession is ancillary to, environmental land.
- Enforcing commitments according to the Rock Evaluate, the Executive will take away obstacles and support tenant farmers’ get right of entry to to schemes, with the purpose of incentivising extra long term tenancy alternatives the place landlords and tenants collaborate to percentage some great benefits of our long term environmental schemes.
Surroundings Minister Rebecca Pow stated: “Now we’re going additional, as introduced within the 2024 Finances, land used as a part of ELM will now be in scope for Agricultural Assets Reduction, which means this land is eligible to be handed on freed from Inheritance Tax.
“It can pay to be a part of ELM and we can proceed to enhance our farmers and landowners to support and preserve the herbal atmosphere along meals manufacturing. I might additionally inspire farmers to take every other take a look at one of the crucial longer-term funding choices akin to tree planting in mild of this announcement.”
Response
NFU President Tom Bradshaw welcome the extension of APR to land in Environmental Land Control (ELM) schemes, which he stated will ‘take away a barrier of access for numerous farm companies and provides farmers extra selection about the right way to use their land’.
“However the extension of this past ELMs could have an hostile have an effect on on meals manufacturing and farm tenancies and we can paintings with Treasury to evaluate the ones implications,” he stated.
In addition to making use of to ELMs, the NFU understands that this reduction would even be given for different environmental land use and may just have an effect on the extent of productive farmland being got rid of from agricultural use. “We can subsequently be having a look intently at any have an effect on evaluate,” it stated.
It warned that it will additionally incentivise homeowners to take land out of farm trade tenancies and personal buyers to buy land to go into into environmental schemes.
Nation Land and Trade Affiliation President Victoria Vyvyan stated the affiliation used to be ‘happy he govt has listened to our requires agricultural belongings reduction to be prolonged’.
“That is welcome information and can assist farm companies ship environmental advantages in addition to meals manufacturing,” she stated.