IHTM24213 | Agricultural tenancies: The Crofting Acts

Crofting is a system of landholding which is unique to Scotland.

A croft is a small unit of land traditionally situated in the former crofting counties of Argyll, Inverness, Ross and Cromarty, Caithness, Sutherland and Orkney and Shetland. There are at present approximately 18,000 crofts in Scotland. A crofter is the tenant of the croft. Usually the crofter holds the croft on the ‘statutory conditions’ which apply to every croft tenancy and will not have a written lease. However, some tenants have purchased their crofts and are now the owner occupier of their crofts.

What are the Crofting Acts?

They are a series of Acts passed since 1886 giving a wide range of rights to crofting tenants such as

● security of tenure and the right to pass on the tenancy to a member of the family or to assign the tenancy to a non–family member

● to have fair rents fixed by the Land Court

● to receive special grants to help them improve the productivity of the land

● the right to purchase either the house site or if they wish the croft as a whole.

The law of crofting was codified in the Crofters (Scotland) Act of 1993 but there have been substantial reforms, particularly in 2007 and 2010 as part of the Scottish Government’s Land Reform Programme.

The legislation relevant to Crofting is contained in the following;

● The Crofters Holdings (Scotland) Act 1886.

● The Crofters (Scotland) Acts of 1955 and 1961.

● The Crofting Reform (Scotland) Act 1976.

● The Crofters (Scotland) Act 1993.

● The Crofting Reform (Scotland) Act 2007

● The Crofting Reform (Scotland) Act 2010

● The Crofting (Amendment) (Scotland) Act 2013.

The Inheritance Tax implications of crofting

The agricultural relief provisions in the Inheritance Tax Act 1984 will apply to property held under the Crofting Acts. Many crofters have other part time employment as their landholding might be quite small and of poor quality but this is not a reason for denying relief. It is simply that the economic conditions in these areas often make it necessary for crofters to have other sources of income.

Any case where the Crofting legislation as set out above is quoted, should be referred to Technical.

In some cases, the value, or part of the value, of a tenancy under the Crofting Acts may not be subject to Inheritance Tax under IHTA84/S177. Also seek advice from Technical if this provision is referred to or is considered to apply.