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The qualifying farmhouse

One of the advantages of APR over BPR is the potential ability to claim IHT relief on the farmhouse. Farmhouses are entitled to APR if they are:

1. •

   occupied, together with land, for agricultural purposes

2. •

   of a character appropriate to the holding of which it forms part

IHTA 1984, s 115(2)

There are a large number of tests that have to be passed in order to satisfy these conditions.

HMRC asks on the IHT supplementary form IHT414 about the extent of farming activities carried out on the land. Once HMRC is satisfied that the land is being occupied for agricultural purposes (Box 5), it will then consider the deceased’s involvement in the agricultural operations (Box 6).

The question of whether or not the house will qualify as a farmhouse will depend on the nature of the occupier’s farming activities.