SVM112030 - IHT Agricultural Property Relief: Rates of Relief

There are two rates of agricultural relief for Inheritance Tax:

  •        a higher rate at 100%. Originally this rate of relief was intended to benefit working farmers. It was available where the deceased/transferor's interest in the property immediately before the transfer carried with it the right to vacant possession or the right to obtain it within the next twelve months.

  •        a lower rate at 50% for other let land.

Over time the circumstances in which the higher rate of relief is due has been extended to cover several additional situations where the deceased / transferor let land. See IHTM24140.

With effect for deaths and other transfers from 6 April 2026 (and including transfers made within 7 years of a death on or after 6 April 2026 if they were made on or after 30 October 2024) the highest rate of relief (100%) will be available on the combined value of qualifying agricultural and/or business property up to £2.5 million, or up to £5m if unused allowance can be transferred from a pre-deceased spouse or civil partner. This will only be due on the chargeable value of relievable property and will not apply to exempt transfers of relievable property. Any value in respect of total relievable property which exceeds the allowance will qualify for relief at 50%. More details can be found at the beginning of IHTM25500.     

Vacant Possession (VP)

If

  • a company owns and occupies land for the purposes of agriculture without any intervening interests or
  • another person occupies it under a licence which is incapable of conversion into a protected tenancy under the Agricultural Holding Acts (for example a grazing licence for less than a year),

the company is regarded as having the right to vacant possession and the property is valued on that basis.

Higher VP Rate

The higher VP rate also applies to let land if the company’s interest in the property is,

  • though let, valued at an amount broadly equivalent to the VP value of the property, or
  • carries a right to VP within twenty-four months of the date of the transfer. See IHTM24144.

Joint Property

Where agricultural property is owned jointly by the company and others with similar interests, the company is regarded as having the right to vacant possession, if the interests of all the co-owners together carry that right.

Additional Guidance: SVM150000