Inheritance Tax Act 1984 section 124C

Environmental management agreements

Section 124C extends agricultural property relief (APR) from inheritance tax to land that has been taken out of agricultural production under an environmental management agreement with a public authority, ensuring that participation in environmental schemes does not result in the loss of APR.

• Land managed under a qualifying environmental agreement is treated as agricultural property for APR purposes, provided it was agricultural property for at least two years before the agreement began and has since been managed in accordance with the agreement.
• Associated buildings can also qualify if they are of appropriate character for the land and were either built for use under the agreement or were already occupied with the land before the agreement started.
• The agricultural value of qualifying land is assessed as though a perpetual covenant required it to be maintained in accordance with the environmental agreement, regardless of whether the agreement is still in force.
• The relief applies to environmental management agreements in effect on or after 6 March 2024, with the new rules taking effect for transfers of value and other chargeable occasions on or after 6 April 2025.