IHTM24034 - Agricultural property: Farm cottages

A farm cottage is eligible for relief if it satisfies two conditions

• the occupier has the required status, and
• it is of a character appropriate ( IHTM24050) to the agricultural land. ( IHTM24031)

It is your responsibility to decide whether the person occupying the property has the required status and to instruct the DV accordingly.

The relief is primarily for cottages occupied by persons employed solely for agricultural purposes in connection with the agricultural property concerned. Cottages occupied by retired farmworkers (who had worked on the agricultural property concerned), their widowed spouses or surviving civil partners ( IHTM11032) are often also eligible for relief given by an ESC dated 13 February 1995 (ESC F16). The concession states that the occupation condition ( IHTM24071) is regarded as satisfied by cottages occupied by retired farm workers or their surviving spouses or civil partners if either

• the occupier is a statutorily protected tenant under the Rent (Agriculture) Act 1976 or Housing Act 1988 (or legislation which has similar effect in Scotland or Northern Ireland), or
• the occupation is under a lease granted to a farm worker (for life and that of any surviving spouse or civil partner) as part of his contract of employment for agricultural purposes and which has a similar effect to that of a protected tenancy.

The term ’retired’ means someone who has ceased full-time work and is in receipt of a pension. It does not include a person who has simply left one job to work elsewhere. In cases where the occupier is still engaged in agricultural work the work does not necessarily have to be full-time. You will need to look at the circumstances in each case. Relief at the higher rate ( IHTM24140) is available for farm cottages where

• the agricultural worker occupied the cottage under an unprotected service tenancy, or assured shorthold tenancy, or
• the worker’s occupation arose under a tenancy which began on or after 1 September 1995.
• When suitable alternative accommodation is available for the tenant, irrespective of whether the tenant was in default of the terms of his occupation. If the tenant was in default then the position is straightforward, as vacant possession will be obtainable, but if there is no such contravention, relief at the higher rate will be dependent upon satisfaction of one of the Cases for Possession in Schedule 3 of the Agricultural Holdings Act 1986.

In all other instances the relief will be at the lower rate. ( IHTM24140)

The guidance at IHTM24165 includes details of the special valuation rule that applies to agricultural cottages.