Professional services Plan to extend agricultural inheritance tax relief

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Good for farmers and environment

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Public consultation now under way

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Greater confidence for landowners

Government plans could see agricultural inheritance tax relief extended to include land under long-term environmental land management.

Chancellor Jeremy Hunt unveiled the surprise move in last month's Spring Budget. The Central Association of Agricultural Valuers described the announcement as good news for landowners and farmers.

CAAV secretary and adviser Jeremy Moody said: “This is welcome news for landowners and farmers, who may have concerns about entering certain environmental schemes in case they forfeit agricultural property relief (APR).”

Call for evidence

Stage one of the process calls for evidence on the tax treatment of ecosystem service units. The aim is to understand the commercial operations and areas of uncertainty in respect of taxation.

Stage two is a consultation about a possible extension of APR from inheritance tax to cover land in environmental land management – exploring how far APR may be a barrier to taking up environmental management options.

The call for evidence also seeks views on the Rock Review’s proposal to limit APR on let land to where it is let for at least eight years. This is a chance for all views to be considered, said Mr Moody.

The CAAV has voiced concern that limiting APR to land let for at least eight years could see any gains outweighed by land being let for shorter terms or not let at all. “It will not encourage anyone who is not letting to start letting,” says Mr Moody.

Long overdue

Strutt & Parker research director Jason Beedell said the launch of a new consultation exploring the taxation of land used for the provision of ecosystem services was one of the most significant rural announcements.

“This is long overdue,” he said.

Mr Beedell added: “The potential expansion of APR [to include] certain types of environmental land management would give farmers greater confidence that changes in land use will not put their tax status at risk.

‘We have long argued that landowners should not be penalised for taking steps to address the challenge of climate change and biodiversity loss.

“It would be a welcome step. Coupled with government guidance on the stacking and bundling of ecosystem payments which Defra has already promised, it will remove another barrier preventing farmers from getting more involved in environmental land management.”

The closing date for the public consultation is 9 June 2023.