Holdover relief on a let cottage if transferred with agricultural land

Key points

• Generally let property is not eligible for holdover relief.
• A transfer as one asset with land let on a farm business tenancy should enable relief to be claimed on the whole transfer.

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There is much debate on whether let agricultural cottages can be eligible for holdover relief under TCGA 1992 s 165 so that they can be passed down to the next generation without capital gains tax. To illustrate let’s suppose that Jonty owns a farm but has retired from farming. Part of the land is now let on a farm business tenancy and part is used for his own diversified non-farming trading activities. The farm is one asset for capital gains tax purposes and includes a farm cottage that is let on an assured shorthold tenancy. Jonty would like to gift the cottage to his daughter but he cannot obtain holdover...

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