The RICS Northern Ireland Land Group has been examining the recent decision by the Special Commissioner, Charles Hellier, regarding the treatment of land subject to conacre for inheritance tax purposes. 

The implications of this ruling could mean that inheritance tax is charged on farmers who let land which has commercial development potential, on a conacre licence.

The conacre system is unique to Ireland and around a third of all farmland in Northern Ireland is let informally to farmers in this way.

Concerns have been raised that the ruling could pave the way to even more aggressive inheritance tax across much broader categories of conacre farmland, and could also have severe consequences for grazing and cropping licence arrangements in England and Wales.

At present, such land enjoys inheritance tax exemptions.  However, in some quarters the ruling has been viewed as having major implications for hundreds of local farmers and their families resulting in the break-up of many family farms.

Historically, Her Majesty's Revenue and Customs (HMRC) has accepted that agricultural land let informally to other farmers "in conacre" was part of normal farming.  However, the ruling by the UK Special Commissioners of Income Tax, taken independently of HMRC, overturned this view.  Pending appeal, land let "in conacre" will potentially be reclassified as an investment activity.

Given the current appeal and the general complexities involved in this case, the RICSNI Land Group is not in a position to provide members with a universal statement of advice and recommend that future similar cases should be treated on an individual basis.

The Land Group is currently reviewing the RICS Conacre Agreement to ensure that it continues to be current and correct.

If you would like more detailed information on this case, the RICS Agricultural Tenancies Monitoring Group has composed a full commentary on the judgement of the Special Commissioner Charles Hellier.