1. What does the exemption cover?
Non-domestic rates (commonly referred to as business rates) are typically charged on buildings that are not dwelling properties and have some commercial purpose for the owner.
The potential exemption, found within the Local Government Finance Act 1988, grants dispensation from paying up to 100% of the rates for either “agricultural land” or an “agricultural building”.
2. Why can agricultural buildings be exempt from business rates
Exemptions for agricultural purposes have existed since 1896, with governments having historically recognised the benefit that providing such support to genuine agricultural businesses can have on the rural sector.
The exemption from paying business rates applies to operations that require the use of buildings which may not be as commercially profitable as shops, offices or warehouses are to other businesses.
3. Could my property be exempt for agricultural use?
If you can show that your property – or “hereditament” – is an “agricultural building” and/or includes “agricultural land”, then it may be entitled to a full or partial exemption. This is dependent on them matching specific definitions found in Schedule 5 of the Act.
For example, a processing plant within the farm might be exempt if you can show that the building is “occupied together with” neighbouring farmland and is also used solely in connection with the farming that happens on that land. Alternatively, a building used for the keeping or breeding of livestock may be fully exempt.
4. How has the approach changed to exemptions for large scale agricultural operations?
Over the years, the categories of potential exemption have been subject to legal argument and interpretation by the Valuation Office Agency (who set the ratings for each property) and also the courts.
In 2025 the Court of Appeal provided clarity and updated guidance on how the legal test for exemption might be applied to a modern farming operation.
It is possible for large scale, modern farming operations to secure exemptions where they can explain how a warehouse, packing plant or processing machinery is still an essential part of the agricultural operation that is taken place on the farm.
Certain farming operations have had to expand across multiple sites or economies of scale in order to survive the modern pressures of the agricultural market. Encouragingly, the courts have acknowledged this evolution of the industry and confirmed that the exemption should still apply in the appropriate circumstances.
5. What can I do if I’m told my building doesn’t yet qualify for exemption or has had the exemption removed?
If you have historically paid business rates on buildings that form part of your wider agricultural operation, there may be merit in obtaining legal advice on whether one of the Schedule 5 agricultural exemptions could be applied in a challenge to that rating.
Similarly, if you have recently received a decision to add a property to the list of business rates, it is possible to “check and challenge” that decision.
In each case, you might be able to argue that the Valuation Office Agency’s categorisation and calculation of your business rates is incorrect; or alternatively that they have made an error by not granting a full or partial exemption due to the agricultural nature of your building.
Thrings’ Agriculture team is one of the largest of its kind in the UK with decades of experience in successfully supporting its farming and landowner clients to achieve their aims, and has been chosen by the NFU to act for its members in more counties than any other firm.
Find out more about how we can support farmers, food producers and rural communities on our Information for Farmers page.
