IHTM24001 - Introduction: introduction to agricultural relief

Essentially, agricultural relief is available on the:- 

Section 116(1) of the IHTA84 states that ‘agricultural relief is due to the extent that the value transferred by a transfer of value (IHTM04024) is attributable to the agricultural value (IHTM24150) of agricultural property’ (IHTM24030). In this case, transfer of value has its extended meaning under IHTA84/S3 (4), so the relief is available on deemed transfers of value (IHTM04025). 

IHTA84/S115 (1) confirms that a transfer of value includes an occasion on which tax is chargeable under IHTA84/Chapter III Part III (IHTM04096) and references to the value transferred by a transfer of value’ and ‘the transferor’ will include, respectively: 

  • the amount on which tax is then chargeable 

  • the trustees of the settlement concerned. 

The relief is not available on other occasions of charge, such as when conditionally exempt property is subject to a recapture charge (IHTM04112). 

The relief is given by a percentage reduction (IHTM24140) in the value transferred by the transfer of value. This means that the relief is 

  • allowed before the deduction of exemptions, (IHTM04022) or 

  • given before any deduction is allowed under IHTA84/S165 for other tax borne by the donee (IHTM14013), and 

  • calculated before any grossing up, (IHTM26071). 

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 limited to the first £2.5m of eligible relievable property, or up to £5m if unused allowance can be transferred from a pre-deceased spouse or civil partner (IHTM25530). The limit only applies to chargeable transfers of relievable property and not to exempt transfers of relievable property. Instructions on how this will apply can be found beginning at IHTM25500.  

Specifically, the relief does not reduce the value of the property concerned for IHT purposes so that: 

  • an express provision, IHTA84/S39A, is included to establish the relationship between the value of the property and the value transferred for the purpose of quantifying the spouse or civil partner exemption (IHTM11031), and 

  • no reduction is made in the ‘historic’ value of property taken into account in determining the rate of tax chargeable in the relevant property trust regime. 

There are detailed instructions about the allocation of exemptions at IHTM26101. 

In the context of relevant property trusts, references to the value transferred by a transfer of value are construed as including references to the amount on which tax is chargeable. So, in the unlikely event of there being a partially exempt occasion of charge in the relevant property trust regime, the exemption is deducted before the reliefs are allowed.