CLA win: APR extended to environmental land use following CLA lobbying

Agricultural property relief will apply to land managed under environmental agreements from April 2025 following continued CLA campaigning

Chancellor Jeremy Hunt has announced that land managed under environmental agreements will qualify for agricultural property relief (APR), in a major win for the CLA’s lobbying.

Jeremy Hunt MP announced the move in the 2024 spring budget, saying it will come into force from 6 April 2025. The scope of the extended relief is reasonably broad and will cover “land managed under an environmental agreement with, or on behalf of, the UK Government, devolved administrations, public bodies, local authorities, or approved responsible bodies”, which includes the Environmental Land Management scheme in England and the proposed Sustainable Farming Scheme in Wales as well as other types of agreement.

The relief requires that the land was deemed ‘agricultural land’ for two years immediately before the change, but not that it was used for agricultural purposes or would have qualified for APR.

This extension to the relief also avoids the “cliff edge” the CLA was concerned would happen at the end of an environmental agreement providing that the “land continues to be managed in a way that is consistent with that agreement.”

The announcement follows significant CLA work with ministers and government officials that the current scope of APR is a potential barrier to some landowners and farmers making long-term land use change from agricultural to environmental use.

Additionally, it has been confirmed that APR will not be restricted to tenancies of at least eight years, and the CLA’s continued lobbying was acknowledged as playing an important role in the government’s decision.

Furnished holiday lets tax regime abolished

The chancellor also announced plans to abolish the Furnished Holiday Lettings (FHL) tax regime from 6 April 2025, meaning that short-term and long-term lets will be treated the same for tax purposes. This has caused significant concern among those with diversified farming enterprises that rely on FHLs as a vital source of income.

FHLs have long been recognised as a crucial element in sustaining the rural and agricultural economy. For many farmers, the integration of FHLs into their farming operations has been a lifeline, helping to provide sustainable cashflow amidst fluctuating agricultural markets and challenging weather conditions.

The CLA will be considering how it might respond to this announcement in the days ahead and awaits the draft legislation on this.

CLA President Victoria Vyvyan says:

The CLA is pleased the government has listened to our calls for agricultural property relief to be extended. This is welcome news and will help farm businesses deliver environmental benefits as well as food production.

“But it’s not all good news. Rather than helping the tourism sector by permanently reducing VAT to make rates internationally competitive, the Chancellor is squeezing holiday let owners and stifling businesses that create jobs and support the rural economy.

“By converting unused or underutilised properties, that may not be suitable as homes in the private rented sector, into high-quality holiday accommodations, property owners contribute to the local community's economic vitality. Targeting them will not help solve the housing crisis.

“The current tax rules for Furnished Holiday Lets provide a crucial support mechanism, strengthening the resilience and viability of many farms and rural businesses that in turn enables them to invest in their work looking after the environment and feeding the nation. Abolishing the tax relief shows a disregard for small rural businesses that often have narrow margins and face a constant need to reinvest.”

A full analysis of the 2024 budget and what it means for members will be included in Friday's weekly news email.