Measure
The government will restrict agricultural property relief (APR) and woodlands relief for inheritance tax (IHT) purposes to assets situated in the UK. A consultation to review the application of APR has also been announced including details on how the rules currently apply, for example in respect of how long a tenant farmer needs to have farmed the land in order for the land owner to qualify for relief. The government are also considering extending APR to certain types of environmental land management.
Individuals and trustees who currently hold assets that qualify for APR from IHT in the European Economic Area (EEA), Channel Islands or Isle of Man. Individuals and trustees who currently hold woodlands situated in the EEA will also be affected.
Currently, APR is available against assets situated in the UK, EEA, Isle of Man and Channel Islands and woodlands relief is available in respect of woodlands in the UK and EEA.
If changes are made following the consultation into how the rules currently apply, then individuals and trustees that own qualifying assets may be affected.
The restriction to assets situated within the UK applies from 6 April 2024.
Any changes made to APR as a result of the consultation process will take effect at some future point.
The UK government previously announced a review of the tax rules in light of the UK leaving the EU, so it is not surprising that this change to target IHT reliefs at assets situated in the UK is being made. The government’s consideration of extending tax reliefs to land which is environmentally managed will be welcomed by those who own these assets.