2020-02-17
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Don’t surrender to a surrender and re-grant without checking the small print

Home / Knowledge base / Don’t surrender to a surrender and re-grant of your tenancy without checking the small print

Posted by Alex Robinson on 13 April 2013

Alex Robinson Partner - Head of Agriculture

It appears that a number of landlords are asking tenants with a tenancy agreement under the Agricultural Holdings Act 1986, to sign anew agreement in order to take advantage of larger Inheritance Tax reliefs.

Tenanted farm assets with a tenancy under the Agricultural Tenancy Act 1995 attract 100% IHT relief whereas tenancies under AHA 1986 only attract 50% relief. The logic from a landlord’s perspective is clear: the tenant has nothing to lose and the landlord has potentially a lot to gain, by the surrender of an old tenancy and the grant of a new one.

The key benefit of a tenancy under the AHA 1986 is lifetime security of tenure which was not retained under the ATA 1995. However, a change in the law in 2006 means that, in certain circumstances, a tenancy granted under an ATA 1995 can retain the protection afforded by the AHA 1986. Therefore if you are approached about a surrender and re-grant of your tenancy, here are a few tips to bear in mind:

  • Make sure you do not surrender any of your rights under the new tenancy.
  • Check that you will not be liable for any capital gains tax as a result of any benefit arising from the change.
  • Check that your succession rights are not compromised.
  • Ensure that any improvements you make are carried forward.
  • Check that the new tenancy will be, as a minimum, as beneficial for you as for the landlord.

Our advice is to make sure that you don’t end up any worse off, for instance giving up a lifetime tenancy for a farm business tenancy. If in doubt, do contact us for advice.

About the author

Alex Robinson

Partner - Head of Agriculture

Alex specialises in non-contentious property matters for agricultural clients.

Alex Robinson

Alex specialises in non-contentious property matters for agricultural clients.

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