IHTM24073 - Occupation: Land Let on Grazing Licence

There are many and varied methods of achieving a relationship between the owners of pasture and those who require pasture land for grazing, mowing or accommodating stock. A wide range of occupation arrangements exist ranging from formal tenancies creating an interest in land to informal verbal licences. The grazing licence is a commonly used arrangement; various terms are used to describe it such as sale of grass, grazing lets, grasskeep and other purely local terms.

Prior to the Agricultural Tenancies Act 1995 (effective from 1 September 1995), which introduced Farm Business Tenancies, grazing licences were an important method of avoiding the security of tenure provisions of the Agricultural Holdings Act 1986 (Section 2[3][a]).

However, grazing licences are still extensively used across the UK. This is because occupation of land on a grazing licence confers other important advantages upon the landowner. Considerations of wider taxation such as Income Tax, Single Farm Payment consequences and Milk Quota considerations all mean that grazing licences are still widely used.

In order to avoid the security of tenure provisions of the Agricultural Holdings Act 1986 grazing licences had to be granted for less than 1 year. Since 1995, there is no reason why grazing licences could not be granted for a longer period.

Where land is let to a third party under a grazing licence or agreement the owner is unlikely to be in occupation for agricultural purposes of that land during the period of the licence. This may have an impact on whether agricultural relief is available on the farmhouse (IHTM24074). Where a grazier occupies land for agricultural purposes the ownership test under IHTA84/S117(b) will need to be satisfied.