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Welcome news on agricultural property relief on environment schemes in Spring Budget

In the Spring Budget 2024, HM Treasury has provided some welcome reassurance for famers adopting environmental schemes on their land. The budget has offered some valuable clarity regarding environmental land management schemes (ELMs) and agricultural property relief (APR) from Inheritance Tax. 

The government has now confirmed that a future finance bill will be introduced to extend the scope of APR from 6th April 2025. From that point onwards, relief will be available for land managed under any environmental agreement with the government, public bodies, local authorities, approved responsible bodies, or devolved administrations. 

This is good news for landowners participating in environmental schemes and a valuable sign of the government's trajectory on environmental policy. It will now encourage landowners who would be otherwise worried that taking part in such a scheme, and taking land out of agricultural production, would leave their loved ones with a substantial inheritance tax bill.

Landowners are partnering with Environment Bank to diversify their farm business through Biodiversity Net Gain (BNG). We have always aimed to ensure that land use at our sites remains primarily agricultural to protect landowners from any tax-related issues down the line. This legislation will now provide an additional layer of security for them. 

The announcement will also be welcome news for ecologists who will be keen to see environmental priorities reflected in fiscal policy, and it's no doubt that this alignment will drive positive outcomes for ecosystems as well as livelihoods. 

The government are now going to set up a join working group with HMRC, HM Treasury, and industry representatives to help identify solutions that can shed light on the tax treatment for the creation and sale of ecosystem service credits and associated units in places where the existing guidance isn’t clear. 

This legislation is unlikely to be a campaign issue or something which a Labour government would look to undermine if the government were to change. In November, shadow environment secretary Steve Reed spoke positively at the Country Land and Business Association (CLA) conference and said that Labour has no intention of scrapping APR. 

As the marketplace for off-site Biodiversity Units from agricultural Habitat Banks begins to really thrive, Environment Bank is delighted to see policies that will support farmers and help to facilitate the restoration of ecosystems across the country. 

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