The Rock Review contains a number of tax recommendations that would affect both landlords and tenants:
- Limit landlord's 100% APR for IHT to Agricultural Holdings Act lettings and FBTs with an original term in excess of 8 years. At the moment 100% APR is potentially available irrespective of term length
- Allow landlords to claim BPR on any non-agricultural value on land let under an FBT for a term greater than 8 years. At the moment landlords cannot generally qualify for BPR at all so this would be a significant widening of the relief
- Where a landlord takes land back in hand for development and then sells it for a capital sum allow CGT rollover relief on reinvestment in let land. At the moment rollover is only available on a sale of land used in the owner's trade and the proceeds are reinvested in a similar in-hand trading asset - and is therefore not an option for landlords.
- Alter the way SDLT is charged to tenants on longer FBTs to reduce the SDLT cost. The SDLT rules are currently fiddly; in some cases there may be no SDLT to pay at the outset of the FBT but a charge arises after a number of years have elapsed. This poses a compliance challenge for such tenants but whether altering the rules to favour agricultural tenants over any other sort of tenant is a solution is a moot point.
Although the justification for these recommendations may be sound (encouraging landlords to continue to let holdings and push them towards longer lettings) for any of them to get traction with the Treasury would require HMT to share the view that the agricultural landlord and tenant sector should have special treatment (beyond that which it already enjoys). Special pleading with HMT is generally a tall order although in this case the position may be helped by the fact that most of the recommendations (with the possible exception of the BPR and SDLT changes) are unlikely to cost the Exchequer very much in reduced tax receipts.
Defra and HMT should carry out a robust analysis on a strategic package of proposed recommendations made in the tax chapter to incentivise landlords to let more land for longer.