• First featured in South East Farmer, September 2015

    Whilst very specific and only applicable in certain circumstances, with the benefit of a little forward planning, APR and BPR may be able to be achieved to help reduce a family’s exposure to IHT and ensure that farming assets and businesses are able to pass to the next generation.

    Requirements for APR

    In order to benefit from APR, it is absolutely essential to understand the requirements to bring a successful claim.

    APR is available on the agricultural value of agricultural property if occupied for the purposes of agriculture for two years before death. If agricultural property is let for the purposes of agriculture, it must have been owned for seven years before death.

    Agricultural property includes agricultural land or pasture. It also includes farmhouses, farm cottages and farm buildings of a character appropriate to the agricultural land or pasture.

    Farm Businesses

    As farms are usually run as partnerships (husband, wife and children) APR also crosses over heavily with BPR.

    BPR is available on certain partnership interests not eligible for APR and can, in some circumstances, allow some non-trading activity to benefit from relief.

    This presents a planning opportunity as it may be possible to place certain non-APR/BPR eligible assets into an eligible partnership structure as a means to wash out those assets and ensure they also benefit from BPR. Care, however, is needed with this type of planning to ensure that the partnership continues to be eligible for BPR if non-eligible assets are introduced.

    It is important to ensure that business operations, as well as the underlying business structure, support a claim for all possible reliefs. A formal partnership agreement will be invaluable with this and should be regularly reviewed and kept up to date.


    The key thing is to begin planning at an early stage by ensuring that specialist advisers such as land agents, accountants and solicitors all work together.

    It is important to ensure that legal documentation for the farm is in place and regularly reviewed. Whilst lifetime planning is essential, this may be adversely affected by a non-tax efficient Will, or worse still, no Will at all.

    Very often, husband and wife farmers, have very straightforward Wills leaving everything outright to each other. This could lead to problems after the first death if the surviving spouse is not actively involved in the farming operation. A far better mechanism is to leave assets eligible to APR and/or BPR either to the next generation or into a trust.

    The practical tip is that all farming Wills should be reviewed to explore the possibility of passing agricultural and/or business assets down to the next generation using BPR or APR on the first death.

    If Wills have not been reviewed then there is still the possibility of the preparation of a deed of variation within two years of the death of the first spouse to die to redirect assets to the next generation or alternatively into a trust.

    If mistakes are made, or opportunities overlooked, the amount of tax payable could be significant.

    This content is correct at time of publication

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