Simon Evans, Arnolds Keys - Irelands Agricultural partner, discusses the extension of Agricultural Property Relief.

This seems as good a place as any to pose a simple question: what is farming?

Before you think that I have gone all philosophical on you, there is a good reason for asking this question right now. The advent of environmental stewardship as a major focus for agricultural businesses puts the whole definition of our industry in focus.

No longer is it all about the "cultivation of soil for the growing of crops and the raising of animals to provide food", as the dictionary classically defines agriculture. And no one is more responsible for the blurring of this previously inviolable meaning than our own government.

Eastern Daily Press: Simon Evans, agricultural partner at Arnolds Keys - Irelands AgriculturalSimon Evans, agricultural partner at Arnolds Keys - Irelands Agricultural (Image: Arnolds Keys)

This month’s Budget extended Agricultural Property Relief to include land managed under environmental agreements with public bodies, local authorities or approved responsible bodies. This marks the first time that this important concession has applied to anything other than the business of food production.

In the past, a farm which set aside 100pc of its land would not be considered to be trading for tax purposes. But now this is no longer the case. In theory a farm could put its entire land into environmental stewardship and still be considered an agricultural business. Unlike 'set-aside' (where complete inactivity might be rewarded with a subsidy), this is about providing ‘public goods’, something which can be seen as trading.

There is one potential area where this could cause problems – at least until case law settles the matter (and who wants to be a legal guinea pig?). A tenant’s statutory protection may be conditional on them using the rented land for agricultural purposes, usually expressed as "used for the purpose of agricultural trade or business".

If such a tenant decides to put this land into environmental stewardship, it is conceivable that the landlord could contest that no "agricultural trade or business" is happening, even if HMRC says it is. Until this is tested in a court, the advice is to consult with your landlord if you intend to take this route.

It is clear that the government is rethinking what it wants farming to be. Agriculture – in its traditional sense – is increasingly being traded away in exchange for environmental schemes for the betterment of our "climate responsibilities", whilst focusing on other sectors of international trade negotiations. The result could be that we have to rethink what being a farmer actually means.

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