The Authorities has introduced an extension to the present scope of Agricultural Property Aid to incorporate all environmental land administration schemes, as a part of the Spring Price range.

It would cowl, from April 6 2025, the Sustainable Farming Incentive, Countryside Stewardship and different stewardship schemes and Panorama Restoration in England, in addition to the England Woodland Creation Provide and different related schemes. The extension additionally applies to the remainder of the UK.

Farmers and landowners collaborating in these schemes can be eligible for Agricultural Property Aid and exempt from related inheritance tax. Land managed underneath an environmental settlement with, or on behalf of, the UK Authorities, Devolved Administrations, public our bodies, native authorities, or authorized accountable our bodies will all be in scope for Agricultural Property Aid.

Defra mentioned the modifications additionally take away a big barrier to tenant farmers and landlords collaborating to enter schemes by eradicating the danger that tenants’ participation in schemes would change whether or not the land is eligible for Agricultural Property Aid.

The brand new coverage design will embody the next essential options:

• Prolonged reduction can be obtainable for lifetime transfers and transfers at loss of life on or after April 6, 2025.
  Aid can be obtainable for land managed underneath an environmental settlement with, or on behalf of, the UK Authorities, Devolved Administrations, public our bodies, native authorities, or authorized accountable our bodies.
• Aid can be obtainable the place there’s an settlement in place for the environmental land administration scheme on or after March 6, 2024. This contains an settlement entered into earlier than 6 March 2024 if it stays in place on or after March 6, 2024.
• Aid will proceed to be obtainable the place an settlement has concluded if the land continues to be managed in a manner that’s in keeping with that settlement.
• Aid will solely apply the place the land was agricultural land for at the least 2 years instantly previous to the land use change. There won’t be a necessity to point out the land was used for agricultural functions and would have certified for agricultural property reduction earlier than land use change. HMRC will present steerage on the mandatory proof sooner or later.
• The present holding interval for agricultural property reduction won’t be restarted by land use change. This implies, for instance, 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 identical 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 market worth of environmental land topic to the particular assumption of a restriction to its current use.
• In line with the present guidelines, buildings utilized in reference to environmental land, together with farmhouses, will qualify for reduction the place that constructing is occupied with, and that occupation is ancillary to, environmental land.
• Implementing commitments in response to the Rock Assessment, the Authorities will take away limitations and enhance tenant farmers’ entry to schemes, with the purpose of incentivising extra long run tenancy alternatives the place landlords and tenants collaborate to share the advantages of our long run environmental schemes.

Setting Minister Rebecca Pow mentioned: “Now we’re going additional, as introduced within the 2024 Price range, land used as a part of ELM will now be in scope for Agricultural Property Aid, which means this land is eligible to be handed on freed from Inheritance Tax.

“It pays to be a part of ELM and we are going to proceed to help our farmers and landowners to enhance and preserve the pure atmosphere alongside meals manufacturing. I’d additionally encourage farmers to take one other take a look at among the longer-term funding selections equivalent to tree planting in gentle of this announcement.”

Response

NFU President Tom Bradshaw welcome the extension of APR to land in Environmental Land Administration (ELM) schemes, which he mentioned will ‘take away a barrier of entry for numerous farm companies and provides farmers extra alternative about use their land’.

“However the extension of this past ELMs could have an opposed impression on meals manufacturing and farm tenancies and we are going to work with Treasury to evaluate these implications,” he mentioned.

In addition to making use of to ELMs, the NFU understands that this reduction would even be given for different environmental land use and will impression the extent of productive farmland being faraway from agricultural use. “We’ll subsequently be wanting intently at any impression evaluation,” it mentioned.

It warned that it may additionally incentivise homeowners to take land out of farm enterprise tenancies and personal traders to buy land to enter into environmental schemes.

Nation Land and Enterprise Affiliation President Victoria Vyvyan mentioned the affiliation was ‘happy he authorities has listened to our requires agricultural property reduction to be prolonged’.

“That is welcome information and can assist farm companies ship environmental advantages in addition to meals manufacturing,” she mentioned.