When it comes to farms and agricultural land we understand more than ever the need for owners and occupiers to get all of their affairs in order - not just to ensure that succession issues are resolved but also to ensure that you pay no more tax than you have to.
Our large Private Client Team are well-versed in looking after the affairs of the agricultral community and will be able to understand and appreciate all aspects of your home and working life and holdings and will be able to help you to set everything up so that problems and expense are reduced and even avoided.
To go to the section that sets out the expertise of our Private Client Team and that shows you examples of their work, click here.
When looking at your affairs our Private Client Team will in particular have an eye on whether you might benefit from Agricultural Property Relief and Business Property Relief.
Inheritance tax ("IHT”) is charged at 40% on estates where the value exceeds £325,000 (referred to as the nil rate band). This tax is charged on any assets in excess of that nil rate band.
There are two important reliefs to reduce or eliminate the impact of IHT on a farming business. These reliefs are Agricultural Property Relief ("APR”) and Business Property Relief ("BPR”).
Agricultural Property Relief
APR is awarded on the agricultural value of assets used as part of an agricultural business. It can also be claimed even where there is agricultural land operated by a tenant or contractor on your behalf. Relief is generally awarded at 100% on the agricultural value of farming assets, although in certain circumstances it is awarded at just 50%.
The farmhouse can also enjoy the benefit of APR. There are qualifications and it would be necessary to consider individual circumstances to provide a fuller picture.
Many claims for APR are denied or restricted though because the ownership of land, the way in which the farm is operated or the type of tenancies that have been granted have not been properly reviewed for many years. A thorough review now can ensure that a valuable relief that substantially reduces tax exposure can be claimed after your death.
Business Property Relief
BPR can be claimed on business assets even if they do not qualify for APR. Not all activities on a farm are treated as eligible for APR. For example horses kept as livery do not count as a farming activity. However, BPR can be used to provide an additional alleviation from IHT. Relief is granted at 100% or 50% depending on the nature of the asset and the circumstances. Again a thorough review of your affairs now is important. Claims for BPR can also be restricted or denied because of the way in which assets are owned or operated, so it's best to make sure you have everything set up properly.
Our team specialists would be happy to assist in advising whether APR and BPR is available in your circumstances. We would also be able to confirm what (if any) steps could be taken to ensure that these valuable tax reliefs can be claimed in the event of your death.
