Agricultural Property Relief (APR)
100% relief for qualifying agricultural assets and how to claim it
Key Takeaways
- • 100% inheritance tax relief for qualifying agricultural property
- • Must be occupied for agricultural purposes for 2 years before death
- • Covers farmland, farm buildings, and agricultural equipment
- • Can be combined with Business Property Relief in some cases
What is Agricultural Property Relief?
Agricultural Property Relief (APR) provides 100% inheritance tax relief for qualifying agricultural property. This relief ensures that working farms can be passed down through generations without being broken up to pay inheritance tax.
- • Qualifying UK agricultural property (land/pasture, qualifying farm buildings, cottages, farmhouses that are character appropriate).
- • Relief rates: typically 100% (common cases) or 50% (certain legacy/older interests).
- • Ownership/occupation tests: 2 years if owner-occupied; 7 years if let/occupied by someone else.
- • APR applies to agricultural value (any non-agricultural "hope value" is outside APR and may require other reliefs).
APR applies to UK agricultural property only.
Full inheritance tax relief for qualifying agricultural property, meaning no tax is payable on the agricultural value.
Minimum period the property must be occupied for agricultural purposes before death (or 7 years if let to tenants).
Qualifying Agricultural Property
APR applies to the agricultural value of property used for agricultural purposes. This includes:
Land and Buildings
- • Agricultural land
- • Farm buildings
- • Livestock buildings
- • Grain stores
- • Farmhouses (if character appropriate)
Equipment and Assets
- • Farm machinery
- • Livestock
- • Growing crops
- • Milk quotas
- • Single payment entitlements
Land subject to qualifying environmental agreements with (or on behalf of) UK/devolved governments, public bodies, local authorities or approved responsible bodies can qualify for APR. Keep copies of the agreement and management plan with your valuation papers.
Occupation Requirements
The property must be occupied for agricultural purposes for specific periods before death:
- 2 years where the property was occupied for agricultural purposes by the transferor.
- 7 years where it was occupied for agricultural purposes by someone else (e.g., a tenant).
Property occupied by the owner or their spouse/civil partner for agricultural purposes.
Property let to tenants for agricultural purposes requires longer occupation period.
Agricultural Value vs Market Value
APR applies only to the agricultural value of property, not its full market value. The agricultural value is what the property would be worth if it could only be used for agriculture.
Farmhouses and APR
Farmhouses can qualify for APR, but they must be of a character appropriate to the property. HMRC considers factors such as:
Only the agricultural value of a farmhouse qualifies. The dwelling must be of a character appropriate to the holding and its agricultural activity (scale, layout, and function matter). A grand "country residence" element above agricultural value does not qualify for APR.
- • Size and scale relative to the farming operation
- • Historical connection to the agricultural business
- • Functional relationship with the farm
- • Whether occupation is necessary for farming purposes
- • Proximity to agricultural land and buildings
Reform from 6 April 2026 — combined allowance and rate changes
- • A combined £1,000,000 allowance applies for the 100% rate across APR and BPR together.
- • Qualifying value over £1,000,000 attracts 50% relief.
- • The £1,000,000 allowance is not transferable between spouses/civil partners.
- • Transitional rules apply (e.g., certain lifetime transfers on/after 30 Oct 2024 where death is on/after 6 Apr 2026).
- • If APR does not cover value above agricultural value, consider BPR for the business element where conditions are met.
Valuation & evidence
- • Use open market value; apply APR to the agricultural value only.
- • Obtain professional valuations for land, buildings and any business element.
- • Keep tenancy agreements, farm accounts, stocking records, environmental agreements, and occupation evidence (who farmed, how, and since when).
- • For undivided shares or complicated titles, add a short valuer's rationale.
APR vs BPR
You cannot claim APR and BPR on the same value of the same asset. Claim APR first on agricultural value; any excess value (e.g., non-agricultural element of a farming business) may qualify for BPR if the business tests are met.
- • Applies to agricultural value only
- • No minimum ownership period for owner-occupied land
- • Covers land let to agricultural tenants
- • Specific protection for farming assets
- • May cover full market value
- • Includes diversified farm businesses
- • Covers non-agricultural trading activities
- • Can apply to shares in farming companies
Paying by instalments
Qualifying agricultural/business property may be paid over 10 equal annual instalments. Interest may apply on outstanding balances. Check which assets qualify and elect on the return if needed.
What does not qualify for APR
- • Farm machinery (as such)
- • Livestock/crops (as such)
- • Development/hope value above agricultural value
- • Land under a binding sale contract at the transfer date
Common Pitfalls and Planning Points
- • Ensure continuous agricultural occupation for required periods
- • Keep detailed records of farming activities and income
- • Consider impact of diversification on APR eligibility
- • Plan succession to maintain agricultural use
- • Review tenancy agreements for let land
- • Consider whether BPR might be more beneficial
Claiming APR
APR must be claimed on the inheritance tax return (IHT400). You'll need to provide evidence of agricultural occupation and may need professional valuations to establish the agricultural value of the property.