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It has been some years since we have had a reported Tribunal decision concerning succession applications under the Agricultural Holdings Act 1986 (AHA 1986). Yet, in little over 12 months, we have seen two First Tier Tribunal (FTT) decisions following applications made on the death of a tenant: Thomas v Countryside Solutions Limited and Holder v The Executors of Major Michael Thomas Hamilton Wills handed down on 16 October and 27 November 2025 respectively. We now also have the Upper Tribunal’s (UT) decision on the appeal in Wills v Holder ([2026] UKUT 409 (LC)).
These cases illustrate just how fact-sensitive the livelihood condition can be.
The livelihood condition requires the applicant to show that, during five of the seven years ending with the tenant’s death, their only or principal source of livelihood derived from their agricultural work on the holding or an agricultural unit of which it formed part. Wills confirmed the accepted position that “principal” means more than 50% and also provided appellate guidance on the treatment of contracting income and the application of section 41 of the AHA 1986.
Importantly, livelihood is not simply a question of taxable income or profit. The focus is on what the applicant actually spends or consumes on ordinary living expenses.
Contracting income
In Wills the applicant farmed the holding but was also involved in an agricultural contracting business. The holding formed the operational base of the business, housing its fuel store and machinery and providing the location for maintenance and repair work undertaken by the applicant. However, the contracting operations themselves were carried out for customers elsewhere.
At first instance, the applicant argued that the contracting income should be treated as part of his agricultural work on the holding. If the FTT disagreed with the applicant’s primary assessment of the contracting income, the applicant proposed apportioning his qualifying and non-qualifying income either 70:30 based on time spent working on and off the holding, or, preferably, an 80:20 split to reflect the wider significance of the holding to the contracting business.
The FTT found that the applicant satisfied the livelihood condition in full, treating the farming and contracting activities as a single enterprise which could not have operated without the holding.
Focus on the applicant’s work, not the business
The UT held that this was the wrong approach. The question is not where the business is based, or how dependent it is on the holding, but where the applicant’s agricultural work is actually undertaken. The Tribunal must first identify the agricultural work carried out by the applicant on the holding and then determine what proportion of their livelihood derives from that work.
Section 36(6) AHA 1986 allows agricultural work “from the holding”, and other work on or from it, to count where it is of a description approved in writing by the landlord. This was an amendment introduced in 2006 following a report from the Tenancy Reform Group to address concerns that diversification could otherwise prejudice applications where, for example, an applicant supplements their income through evening contracting work. The UT regarded that amendment as supporting the distinction. If “agricultural work on the holding” had always encompassed agricultural contracting undertaken elsewhere merely because the business was based at the holding, the statutory extension to work carried out from the holding would make little sense.
The practical point is clear: economic or operational dependence on the holding is not, by itself, enough. Applicants need to establish what work they personally undertake and, where relevant, whether the necessary written landlord approval is in place.
Looking beyond contracting income
Although Wills concerned the treatment of contracting income, it raises the wider question of how an applicant’s livelihood is attributed to qualifying agricultural work. The same issue arose in Thomas.
In Thomas, the applicant derived income from both agricultural work on the agricultural unit and from non-qualifying income as an agricultural engineer. The question was how living expenditure funded through accounts containing both qualifying and non-qualifying income should be treated. The Tribunal rejected the suggestion that qualifying income could notionally be treated as spent first. Instead, it apportioned expenditure to reflect the respective contributions of qualifying and non-qualifying income to the mixed funds.
The decisions therefore approach the same underlying problem from different directions. Thomas concerned how livelihood should be attributed where qualifying and non-qualifying funds are mixed. Wills addressed the earlier question of which activities were capable of generating qualifying livelihood in the first place.
Both demonstrate the importance of identifying the connection between the applicant’s livelihood and their own agricultural work on the holding or relevant agricultural unit, rather than focusing simply on the wider business or the applicant’s overall involvement in agriculture.
Section 41: more than a “near miss”?
What happens where that exercise leaves an applicant short of the more than 50% threshold?
Section 41 provides a potential safety net. An applicant who does not fully satisfy the livelihood condition may nevertheless be treated as eligible where the condition is satisfied “to a material extent” and the Tribunal considers that, in all the circumstances, it would be fair and reasonable to do so. Both Thomas and Wills required the Tribunal to consider section 41.
In Thomas, the FTT found the applicant’s percentages over the seven-year relevant period were 44.6%, 41.2%, 45.3%, 57.1 %, 44.7 %, 41.5% and 47.2%. The FTT held that this fell short of satisfaction “to a material extent”, although it observed that the outcome might have been different had the applicant fallen short in only one or two years, with finely balanced results in the remainder.
In Wills, the FTT considered that, if required to determine section 41, a 70:30 split most accurately reflected the applicant’s work on and off the holding. On that basis, the agreed qualifying livelihood figures were 39.7%, 42.2%, 37.2%, 42%, 44.7%, 45.9% and 59.7%, which the FTT considered insufficient to satisfy the livelihood condition to a material extent. Had the applicant’s preferred 80:20 split been adopted, there would have been three years above 50% and two further years above 48%, which the FTT accepted would have been sufficient for section 41.
The UT confirmed that whether the livelihood condition has been satisfied to a material extent is principally a question of assessment and judgment for the specialist Tribunal. There is no single prescribed method of apportionment: time spent working on and away from the holding may provide a logical measure, but other relevant factors may be considered.
Importantly, the UT did not determine whether section 41 was satisfied or whether the 80:20 approach was correct. Instead, it held that the FTT’s reasoning for rejecting that approach was flawed and remitted the section 41 issue for reconsideration. The FTT therefore remains free to reach the same conclusion or a different one.
What does this mean in practice?
Both decisions are useful reminders that the livelihood condition is rarely as straightforward as asking whether an applicant makes their living from farming.
Modern farming businesses often involve contracting, diversified activities, different landholdings and partnerships. The statutory test requires a closer examination of what work the applicant actually undertakes, where it is carried out and how their livelihood can be attributed to qualifying agricultural work.
That analysis should not begin once the tenant has died. Where succession is contemplated, reviewing the livelihood condition early can identify potential difficulties while there is still an opportunity to address them. In particular, Wills highlights the importance of considering how contracting and diversified activities are treated and whether appropriate landlord approval is in place for the purposes of section 36(6).
Equally, falling short of the 50% threshold is not necessarily the end of the road. Section 41 requires a separate assessment of whether the livelihood condition has nevertheless been satisfied to a material extent. Wills confirms that this is an evaluative exercise for the specialist Tribunal, not simply a mathematical test.
The central lesson from both decisions is therefore that the figures matter, but so does the analysis behind them. Understanding how an applicant’s work, business arrangements and household expenditure fit within the statutory test can make the difference between establishing eligibility and falling short.