by • January 16, 2016 • Inheritance TaxComments Off on Landed Estates: APR/BPR753

Landed Estates: APR/BPR

NOTE: This article was published in January 2016 and reflects the law as it stands on the date of publication and not at any later date.

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  • APR has priority: IHTA 1984, s. 114
    • agricultural value of agricultural property
    • agricultural land
    • cottages and farmhouses of character appropriate to property
    • occupied for purposes of agriculture
  • BPR
    • relevant business property
    • interest in a business/unquoted shares in company
    • owning agricultural property
    • assets used for purposes of business


  • APR on agricultural value of land
    • BPR on development value
  • APR on agricultural value of farmhouse, farm cottages
    • BPR on premium value if used for purposes of business
  • BPR not APR on let cottages
    • not occupied for purposes of agriculture
    • if part of predominantly trading business
  • BPR on assets other than land and buildings
  • BPR on minority shareholding in farming company
    • IHTA 1984, s. 122
  • APR on freehold reversion to let land


  • Mixed landed estate
    • farming activities
    • forestry
    • commercial shooting parties
    • hydro-electric plant/wind farm
    • let cottages on ASTs
    • farmhouse with office
  • BPR if single business not mainly one of holding investments
    • IHTA 1984, s. 105(3)
    • 50% + non-investment

TESTS: HMRC v Brander [2010] STC 2666

  • Context
    • perspective of intelligent businessman “in the round”
    • preponderance of business activities and efforts
    • not putting each activity into trading or investment bag
  • Acreage/use of land (equal)
  • Turnover/net profit (mainly trading)
  • Capital values (investment: 1.88:1)
  • Time spent (trading; 79%: 22%)
    • Time must be justifiable: Clark v HMRC [2005] WTLR 1465)
  • Unitary landed estate: mainly farming, forestry, woodland


  • Farming in-hand
  • Sporting activities
    • even if little income
    • vermin control
  • Hydro-electric plant
    • maintained and managed
    • income from generation of electricity
    • not letting


  • Let properties surplus to farming requirements
    • Brander: investment, but subsidiary part of predominantly trading business
    • even though capital value much greater than trading stock
    • long-term policy to retain land
  • Farmer v IRC [1999] STC (SCD) 321
    • net letting profit exceeded farming profit
    • small area
    • historical connection with farm
    • short leases consistent with non-investment


  • 100% not 50% APR where (IHTA 1984, s. 116(2); ESC F17):
    • right to vacant possession within 24 months
    • value of freehold broadly equivalent to vacant possession value
    • tenancy beginning on or after 1 Sept 1995
  • No right to vacant possession within 24 months
    • Tenancy under AHA 1986
  • Value of freehold not = vacant possession value
    • unless transferor and tenant closely connected
    • transferor controls farming company


  • Lodge used for:
    • holiday lets
    • shooting parties
    • 24-hour occupation by farm manager during lambing season
    • farm office
  • Need to provide “extra services” to guests
    • cooking/cleaning etc
    • B&B or hotel-like enterprise not investment
    • not excepted asset
      • small part occupied by farm office
      • rest a B&B forming minor part of business


  • Surrender and re-grant of AHA 1986 tenancy
    • AHA 1986, s. 4(1)(g)
    • AHA 1986 applies to re-granted tenancy if written contract indicating that AHA 1986 applies
    • new tenancy will begin on or after 1 Sept 1995
    • 100% relief on freehold reversion
  • No CGT charge on surrender by tenant (ESC D39)
    • if terms of new tenancy equivalent to those between unconnected parties at arm’s length and
    • terms of new tenancy not different from old (other than duration and rent)
  • No SDLT charge on surrender and re-grant
    • FA 2003, Sch. 17A, para. 16
    • unless tenant a company connected with landlord (FA 2003, s. 53(1)


  • Liabilities incurred directly or indirectly
  • To finance acquisition of relievable property or
    • to enhance or maintain value of such property
  • Set first against value of relievable property before relief
  • Relief only on excess value
  • Even if borrowing secured against other assets, e.g. house
  • IHTA 1984, s. 162B

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