UK: Rural Update - Spring 2011

News in brief

  • The Chancellor's Budget on 23 March 2011 was in general positive for rural landowners. It included a decrease in fuel duty by 1p per litre, funded by an additional charge on oil producers, and assistance for owners of small businesses in the proposed merger of the income tax and National Insurance Contributions regimes, thus decreasing administration.
  • The Budget also increased the limit for gains attracting Entrepreneur's Relief from £5 million to £10 million, helping individuals wishing to sell their business. Importantly, the Coalition steered clear of any controversial changes to the inheritance tax or capital gains tax regimes.
  • The new rate of SDLT of 5% for residential properties valued at over £1,000,000 will also come into force from 6 April 2011 and promises to cause confusion where agents disagree about the split of values of rural properties which comprise part residential and part non-residential.

Be aware of Agricultural Workers' occupancies

It is often a feature of an Estate or rural business that its employees live in an Estate property. However, the treatment of agricultural workers is peculiar and may catch out the unwary. Considerable care must be taken when granting occupancies and accommodation to employees who are, or may become, predominately employed in agriculture. The inherent danger is that the occupation granted could become an 'assured agricultural occupancy', which confers considerable security of tenure on the employee. This, in turn, will severely limit the landlord's ability to remove the tenant from the let property. This security of tenure will subsist even if the employment is terminated.

The devil is to be found in the detail of the Housing Act 1988, which provides that an assured tenancy will no longer be an assured tenancy if the tenant fulfils the 'agricultural worker conditions'. These conditions include working 91 weeks in agriculture out of the preceding 104 weeks. Other conditions require that the dwellinghouse must have been in 'qualifying ownership' during the subsistence of the tenancy. In brief, this means that the employer must be either the owner of the dwellinghouse or someone who has made arrangements with the owner for it to be used to house agricultural workers.

The way to avoid this problem is to serve a notice (in prescribed form) on the tenants stating that the tenancy is to be an assured shorthold tenancy. The landlord will also need to satisfy the usual criteria to create an assured shorthold tenancy, but, importantly, the service of this prescribed notice will prevent the tenancy from becoming a protected agricultural tenancy.

It should also be noted that an employee's status may change over time. An employer should, therefore, keep a close eye on his employees to ensure that the work that they do has not shifted predominately towards agricultural work e.g. a gardener whose role evolves. Again, this will help to prevent unwittingly conferring a higher degree of security of tenure on the tenant.

Family Courts invade inherited wealth

Since the decision of the House of Lords in White v White in 2000, the Family Court's treatment of the inherited wealth of one party to a divorce has been a matter of significant debate. The end of 2010 brought a Court of Appeal decision in this area that will assist individuals and their advisers in considering the potential impact of divorce on inherited property.

On 27 October 2010, the Court of Appeal handed down judgment in the case of Robson v Robson. This case involved a 21 year marriage during which the parties had two children who were aged 17 and 20 at the time of the proceedings. The husband's assets, predominately inherited from his father, were valued at more than £22 million and were made up almost entirely of rural estates – the principle one in the Cotswolds and a smaller estate in Scotland. In contrast the wife had assets valued at less than £350,000. Both the husband and wife were found to have enjoyed the full fruits of the husband's inheritance to fund their lifestyle at the expense of protecting it for future generations. The Court of Appeal awarded the wife £7 million, which was made up of £3.5 million to purchase a suitable property and the balance, capitalised periodical payments. The husband was forced to sell a substantial part of his inherited estates in order to fund this settlement.

In reaching this decision the Court was heavily swayed by the husband's management of and apparent disregard for the future of the estate. As the couple had 'lived off the fruit of the land without properly husbanding it' the Court found it acceptable to award the wife a settlement out of the estates, given that during the marriage 'the parties had jointly elected to live off [the inherited assets] and, in effect, use them as a substitute for earned income'. It was held that since they had drawn heavily upon capital during the marriage, these same assets should not be ring-fenced for the purposes of the divorce. The husband's claim that the estates were being managed for future generations was rejected, in part, because he did not come up with a viable proposal to safeguard their future.

However, the Court was clear that the approach to inherited assets will not always be the same. Important considerations are the nature of the assets, the time of inheritance (it was suggested that an asset acquired by the previous generation might be considered differently from one which had been in the family several generations), the use made of the assets by the parties and the needs of the parties at the time of separation. The Court of Appeal confirmed that the nature and source of an asset may justify a departure from the principle of equality of division and the suggestion was that in cases where the inherited or pre-acquired assets have not been depleted for general living expenses and there were sufficient marital assets to meet the needs of each of the husband and wife on divorce, ring-fencing of inherited wealth may be justifiable. It would very much depend on the circumstances of each case.

This case demonstrates the inquisitorial nature of the Family Courts and makes it clear that no asset is off limits when it comes to a divorce settlement. However, the special character of inherited assets was recognised, even if it was not enough in the particular circumstances of this case to ensure their protection. The case highlights another benefit of an estate having in place a strategic plan for the future.

Retiring employees

As medical care and living standards have advanced, so our national life expectancy has increased. The corollary of this generally positive trend is that we will need to work for longer in order to fund our retirement.

This has been made easier by the Government's publication of draft regulations scrapping the current 'default retirement age'. This means that employers will no longer be able compulsorily to retire workers at age 65.

From 6 April 2011, an employer who wishes to continue to retire employees at a particular fixed age will have to ensure that retirement at that age can be justified in order to avoid a charge of age discrimination under the Equality Act 2010. Whether an age can be justified for a particular role will be a question of fact in every case. An employer will have to be able to show that the chosen age meets a real business need (i.e. there is a legitimate aim) and that it is proportionate to use that age as a means to meet that aim.

Most employers are likely to move away from the concept of a 'fixed retirement age' altogether (as it may in practice be very difficult to justify a particular retirement age for all but a small number of specialist roles, such as airline pilots). It would be good practice to institute ongoing 'workplace discussions' over employers' future plans and employees' aims and aspirations for the short, medium and long term (which may, of course, be influenced by when they want – and when they will be able to afford – to cease working).

What should you do, then, if you need to bring an employee's employment to an end after the law changes? Employers will still be able to appraise whether staff are performing their jobs effectively, and fairly dismiss those who are not. Review your performance and capability management processes across the workforce (to focus on older employees could in itself be age-discriminatory) to ensure that, if necessary, you can remove employees who are underperforming or who are struggling with the physical demands of a role. For employers who have become used to turning a blind eye to any performance issues as long-serving employees approach retirement, this is likely to require something of a cultural shift – a conversation about a departure on performance grounds may be very different in tone to current discussions about an impending 65th birthday. Agricultural employers should also think carefully about what property rights a housed employee may have on retirement.

The change formally takes effect from 1 October 2011. The current draft regulations permit up to 12 months' notice to be given (on or before 5 April 2011) to employees reaching their 65th birthday before 1 October, meaning that the employer's notice of retirement must expire no later than 5 April 2012 (although a request from the employee to retire later, under the existing procedure, could mean the actual date of retirement being postponed to before 30 September 2012). The law of unintended consequences may operate, therefore, to provoke a rash of compulsory retirement notices before 6 April, as employers (already keenly monitoring headcount) act now with a system they know, rather than take a risk with the nascent new approach.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Claire Harris
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.