Business Clinic: Is our orchard liable for business rates?

Whether it’s a legal, tax, insurance, management or land issue, Farmers Weekly’s Business Clinic experts can help.

Sam Shaikh, associate, Carter Jonas offers advice on business rate issues, and here looks at a question about a cider orchard.

See also: Business Clinic: what are the premiums for battery storage?

Q: We grow 150-200t of cider apples on a 6.3ha orchard and produce cider and related products such as apple cider vinegars.

This is our only land apart form 2ha on which we keep sheep. According to Millington v Secretary of State, the production of cider, like wine, qualifies as agricultural. 

Everything we make is produced on the farm. In our on-site farm shop/tasting room (84sq m combined) 90% of sales are our own product, mainly cider.

There is seating for people who come on educational farm tours and then buy our products.

We have a premises licence to be able to hold and sell alcohol from the farm. Having the tasting room for the sale of cider does not therefore require a change of use according to planning law.

We have 14 tent camping pitches between the rows of apple trees. No change is made to the land/site to accommodate them, but we provide showers on skids.

Does planning law regarding agricultural holdings such as cider farms and vineyards affect liability to business rates?

We are being charged business rates for a farm shop, camping and premises but question whether our tasting room and tent camping should be caught by business rates?

A: While planning law and use classes will govern land and development permissions, the planning system has a limited bearing on rating and business rates.

The interface of the two entities is complex and the rating system relies on its own set of principles, shaped by decades of case law precedent and legislation, independent of modern-day planning regulations.

Business rates is a tax on occupation of the land and buildings subject to meeting four essential criteria (actual; exclusive; beneficial; and permanence/transient occupation), unless the properties are exempt.

Agricultural exemptions

An agricultural exemption from business rates exists and is contained within Schedule 5 of the Local Government Finance Act 1988. This exemption extends to agricultural land and to some extent agricultural buildings.

Agricultural land is defined, among other descriptions, as “arable, meadow, or pasture land only […] and anything which consists of market garden, nursery ground, orchard or allotment”.

Orchards, which are intrinsic to the cider-making process, are explicitly included within the legislation, indicating that the agricultural exemption may apply to the cider orchards.

Tasting rooms

However, when looking at the tasting room, the situation becomes more intricate.

To be eligible for an agricultural exemption, agricultural buildings must be used solely in conjunction with agricultural operations on agricultural land.

Therefore, as the tasting room will incorporate activities such as the processing and sale of goods, it is likely to be deemed separate to the agricultural operations.

Consequently, the tasting room would usually be classified as rateable property in a similar manner to the farm shop.

The relevant legislation does not explicitly mention wineries and vineyards. These properties often fall into the category of rateable properties and wineries and vineyards have their own category in the rating list.

Campsite

Regarding the campsite, while business rates are indeed applicable to caravan and campsites, the size, scale, configuration and permanence of the site are all important considerations.

Smaller campsites may find they are eligible for small business rate relief, while for larger campsites, business rates can be a very complex issue.

You should explore reliefs including small business rates relief, which may be accessible based on the specifics of your circumstances and the rateable value of the property in question.

Do you have a question for the panel?

Outline your legal, tax, finance, insurance or farm management question in no more than 350 words and Farmers Weekly will put it to a member of the panel. Please give as much information as possible.

Email your question to FW-Businessclinic@markallengroup.com using the subject line “Business Clinic”.