A chink of light in an otherwise gloomy budget for farmers and rural business owners?
The reform of Agricultural Property Relief (APR), announced in the UK Budget yesterday, came as a significant blow for farmers and rural business owners. However, there is a small chink of light in the confirmation that APR will be extended to land managed for the benefit of the environment under agreements approved by the UK and devolved governments, or various approved responsible bodies, from 6 April 2025.
This was the previous government’s position after consultation last year, but it will be a relief to many already involved in environmental schemes such as the Sustainable Farming Incentive, Countryside Stewardship and Landscape Recovery scheme, that the relevant land will be treated in the same way, for inheritance tax purposes, as land used for agricultural purposes, encouraging these valuable grants to be secured and positive impacts on the environment to be felt.
That said, it remains to be seen whether, with the reform of APR, it is financially viable for the rural sector to pursue these environmental schemes, which were designed to incentivise activities which support the UK’s climate and biodiversity targets, particularly when one considers that “environmental land” will form part of an individual or trust’s 100% relievable allowance of £1 million. Ultimately, an exercise will have to be conducted to determine what makes financial and practical sense in the circumstances and this may see a reduction in the take up of environmental schemes.
"The government has confirmed it will extend the existing scope of agricultural property relief from 6 April 2025 to land managed under an environmental agreement with, or on behalf of, the UK government, devolved governments, public bodies, local authorities, or relevant approved responsible bodies"
