Gildernew welcomes clarification regarding Inheritance Tax on conacre land

Minister for Agriculture and Rural Development, Michelle Gildernew MP, MLA, has welcomed the clarification received from the British Treasury on Agricultural Property Relief and conacre land.

A letter received by the Minister from the Financial Secretary to the Treasury has clarified that conacre land will continue to be eligible for Agricultural Property Relief (APR) from Inheritance Tax provided the land was owned by the deceased for a continuous period of seven years prior to death and that it was occupied by someone (such as a conacre tenant) for the purposes of agriculture during this time.

The Minister said: “This clarification, for which I have been pushing hard, is very welcome as it means that the vast majority of conacre land will continue to qualify for Agricultural Property Relief. Importantly, the letter has stated that the Treasury has no plans to change the rules around APR, so hopefully this will end the current uncertainty regarding its future application to conacre land and enable landowners to plan their affairs accordingly.”

The Minister continued: “However, I should warn that conacre land which has been owned for less than seven years remains potentially liable to Inheritance Tax on its agricultural value. Helpfully, the Treasury has confirmed that where land owned by the deceased was inherited from a spouse, the combined period of ownership by the deceased and spouse will count towards the seven year period. It has also been confirmed that farm dwellings on holdings let in conacre will not qualify for APR. While this latter aspect may be a disappointment for some, the clarity we now have will enable landowners to plan accordingly and take steps to mitigate the extent of any potential Inheritance Tax liability.”

The Minister concluded by saying: “I know that there has been much rumour and speculation about the current and future availability of Agricultural Property Relief on holdings let in conacre. The written clarification I have secured from the Treasury confirms that the vast majority of agricultural land, whether under conacre or actively farmed by the current owner, will continue to qualify for APR.

“However, taxation is a complex matter and individual circumstances may mean that in a small number of cases, a potential Inheritance Tax liability on the agricultural value of land may remain. Therefore, I urge anyone concerned about Inheritance Tax or contemplating land transfers to seek professional advice on the matter.

“There still remains the separate issue of Business Property Relief on conacre land with development potential. In conjunction with the Finance Minister, I am continuing to pursue with the British Treasury our proposals on a way forward which would avoid jeopardising the continued existence of family farms that happen to have a theoretical development value. I am pleased to report that the Treasury has committed itself to further dialogue with us on this issue.”

Notes to editors:

1. An electronic version of the letter from the Financial Secretary to the Treasury is available from the DARD website.
2. Agricultural Property Relief, if granted, reduces the agricultural value only of land to zero for the purposes of Inheritance Tax. It does not apply to the additional business property or development value of land that has development potential.
3. The McClean judgment found that land in question which was let in conacre was not eligible for Business Property Relief and, therefore, its development value is subject to Inheritance Tax.
4. All media enquiries should be directed to the DARD Press Office on 028 9052 4619. Out of office hours please contact the duty press officer via pager number 07699 715 440 and your call will be returned.