Farmers and landowners hoping to use a new inheritance tax relief announced in last week’s Budget may have to wait for more detail.
Chancellor George Osborne unveiled an extra allowance of £100,000 allowance from April 2017 when a home is passed on to a direct descendant at death.
This will rise to £175,000 by 2020-2021, before tracking an index.
For homeowners who are married or in a civil partnership this could total £1m of tax relief – if the current nil-rate band of £375,000 each is included.
Farmland and buildings still qualify for full agricultural property relief but homes on the farm that have less of a link to active production might be able to use the new exemption.
David Missen, head of agriculture at MHA, said the proposals looked complex but could reduce the interest HMRC was showing in farmhouses.
“Farmers need to review wills and inheritance tax plans to ensure the relief is not wasted, such as by leaving the house to an indirect descendant.”
David Missen, MHA
“Farmers need to review wills and inheritance tax plans to ensure the relief is not wasted, such as by leaving the house to an indirect descendant,” he said.
The residence relief will taper away for estates worth more than £2m, with £1 lost for every £2m of value over the threshold.
This is the value of assets minus the liabilities but before any tax reliefs.
Dodd & Co partner Rob Hitch said this meant many landowners would not be able to benefit from the extra residence allowance.
“There may be opportunities to plan to use this relief, but we are now going to get full details until September, so any planning needs to be put to one side for now,” he said.