Types of agricultural tax exemptions

Written by peter mitchell
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Types of agricultural tax exemptions
Land used for farming gets some tax relief in the UK. (Jupiterimages/Photos.com/Getty Images)

In the UK, agriculture tax exemptions fall into two main categories: vehicle tax and inheritance tax. In both cases, expect reductions in the amount of tax you'll pay or even full exemption. However, as with all tax matters, the details are important. Fail to meet HM Revenue and Customs' eligibility criteria and you could end up paying tax and even incur fines. In some cases, agricultural land also qualifies for some council tax reductions.

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In the UK, most vehicles have to pay road tax. However, according to the Gov.uk website, vehicles used solely for agricultural reasons receive some tax exemptions. This applies to all agricultural vehicles used on farmland and off public roads. It also includes vehicles that only travel on roads for less than 1.5 kilometres at a time, such as tractors making short trips between farm buildings. Note that you'll still need to apply for a tax disc to display on the agricultural vehicle.

Agricultural relief

Property and land passed along to other people in a will or trust is subject to inheritance tax. However, agricultural relief means that some agricultural property qualifies for tax exemption or reductions. In some cases, property used on a working farm will qualify for 100 per cent exemption, according to HMRC. The main exception is if the property has been rented out to tenants before September 1995, in which case it receives 50 per cent tax reductions. The relief also only applies to certain types of buildings.


If you have property used in relation to farming activities, such as rearing dairy cattle or growing maize, then the chances are it will be eligible for inheritance tax exemption. This also includes land areas listed under the Habitat Scheme for countryside preservation. However, if a property such as a farmhouse is proportionally large compared to the area of land being farmed, then it may be subject to inheritance tax. Also, if non-farm workers live in the house, it may be classified as not for agricultural use. Derelict buildings and any actual livestock are also not eligible for tax relief.

Council tax

All agricultural property currently use is subject to council tax at rates calculated by your local authority. However, in Scotland some farmland is exempt from council tax. In particular, derelict and unused buildings don't qualify for council tax payment. That means that any ruined barns, empty grain stores or similar buildings should be exempt from council tax.

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