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Buried among the depressing inheritance tax (IHT) headlines since last autumn, one bright spot is that the Finance Bill 2024/25 will legislate the extension of agricultural property relief (APR), on deaths and other IHT events from 6 April 2025, to land which has moved from farming to new environmental use.
The draft legislation provides that, to qualify for relief:
The land must have qualified for APR for at least two years before it was turned over to environmental use. There must be no break between the former, APR-qualifying use and the new environmental use.
The new environmental use must, from day one, have been under a legally enforceable agreement with a public authority for protecting, restoring or enhancing the natural environment or natural resources of land or water, and which prevents ongoing agricultural use.
The environmental management agreement must not have ended before 6 March 2024, but relief will continue where the agreement ends after that date and the land continues to be managed in accordance with the (expired) agreement.
APR will continue to cover character-appropriate buildings occupied and used in connection with the land in accordance with the agreement.
This is a welcome update, even if it is disappointing that the draft wording is slightly tighter than the previous, now obsolete, provision for APR on land in habitat schemes.