Farms and Estates update: Equestrian business rates

Published: Thursday 1 August 2019

Property used for equestrian purposes varies enormously.  Some businesses are run from bespoke premises built specifically for equestrian purposes and others have grown organically as a diversification of a pre-existing agricultural business.

Where it is clear a premises is used solely for equestrian purposes the business rates position is relatively clear.  However, where the equestrian business is on a shared premises, where agriculture and equestrian are both in existence, the position is muddied.

In most instances, land and buildings used for agricultural purposes enjoy an exemption from paying business rates which does not extend to equestrian use. Most equestrian businesses, including livery businesses, are not considered agricultural activities and therefore, do not qualify for the agricultural business rate exemption. 

In establishing the area liable to business rates, it is necessary to establish the purpose for which the land is occupied.  Grazing land (used only for grazing) occupied by horses will be exempt from rating, but the stables, ménages, feed and storage areas have no exemptions.  A relief known as stud relief is available for premises used for the breeding and rearing of horses (stud farms).

Whilst no one wants to pay business rates unnecessarily, ensuring you have the correct business rate classification on your premises can help a claim for inheritance tax (IHT) business property relief (BPR).  Land and buildings used for agricultural purposes have the benefit of qualifying for IHT agricultural property relief (APR) which gives a relief of up to 100% on the agricultural value of the asset.  This relief does not extend to land and buildings used for equestrian purposes, unless the business is that of a stud farm.

It is likely that part of the land and buildings including the stables, tack room and ménages are used exclusively for equestrian purposes.  By registering these buildings for business rates and running your equestrian business from them, you are separating these buildings from the farming enterprise.  No IHT claim would be available using APR, but a BPR claim would be possible.  The benefit of a BPR claim is that this would give up to 100% IHT relief on the market value of the assets. 

If you find yourself in the position of having a potential business rate liability, you may be able to claim small business rate relief.  The relief covers property where the rateable value (RV) is less than £15,000 and your business uses only one premises.  If the RV is below £12,000, no rates are payable.