Tenant farmers’ representatives say valuable inheritance tax reliefs should be restricted in an effort to persuade landowners to let land on longer terms.


Farming arrangements which are in effect “sham” tenancy agreements should forfeit preferential inheritance tax reliefs, in a bid to reverse landlords’ increasingly short-term approach to letting farmland.

Some contract farming agreements, share-farming deals and grazing and cropping licences were, in effect farm tenancies and should forfeit inheritance tax relief because the “landlord” is not involved in day-to-day farm management, the TFA says.

Chairman Greg Bliss told the association’s AGM this week that short-term lets were threatening the sustainability of the tenanted sector. Commenting on the 100 per cent relief avaliable for the agricultural value of holdings let after 1 September 1995, he said: “We are beginning to question that this relief should be so widely available. What is in the national interest from providing the landlord with such an advantage when his response is to let only for a short term on restrictive terms?

Some of the largest institutional landlords were taking a dangerous short-term approach even where tax was not the main consideration, said Mr Bliss. “This is best characterised by the current position of the Church Commissioners who typically will not let any land or farms for anything more than three years. Other landlords such as the Crown Estate are also taking an increasingly short-term approach when considering letting farms.”

Mr Bliss acknowledged that some other institutional landlords, like the Duchies of Cornwall and Lancaster, supported longer-term succession tenancies.

In a move that would help many landlords, Mr Bliss also called for more favourable income tax treatment for rental income from longer term lettings.

But Country Land and Business Association president William Worsley said these ideas would not work in practice. “There appears to be a difference of opinion about how the current tax structure works and the kind of incentives that might genuinely attract landowners to let more holdings for longer periods.”