Business Clinic: Are changes coming for inheritance tax reliefs?

Whether you have a legal, tax, insurance, management or land issue, Farmers Weekly’s Business Clinic experts can help.

Here, Nicholas Smith of accountant Duncan & Toplis advises on the potential for changes to inheritance tax.

Q I have seen in the press there might be changes to inheritance tax (IHT). Is this going to affect agricultural property relief (APR) and hence my farming business if I were to die?

Nicholas Smith
Partner and head of taxation services, Duncan & Toplis

A You would be well advised to keep an eye on this area of taxation – changes may be implemented soon. 

Chancellor of the exchequer, Philip Hammond, wrote an open letter to the Office for Tax Simplification (OTS) in January asking for a review of IHT.

The OTS responded it will carry out a review by issuing a consultation this year.

See also: Business Clinic: Moving cows – when can we open and close gates?

The scope of the consultation will include looking at complexities arising from IHT reliefs, and the scale and impact of taxpayers’ decisions on investments. This might mean the OTS suggesting APR is amended or even abolished. 

If there are to be changes, it is likely that they will be announced in the Autumn Budget in November.

APR can apply as a relief from IHT to landowners with tenant farmers, as well as those who occupy their own land, but it only gives relief in respect of the agricultural value. 

With the political pressure on house building, much farmland would appear also to have “hope” value. 

Assuming you farm in your own right, or as a partnership, there will usually be another relief from IHT which can be claimed in the event of your death. 

This is called business property relief and in many ways is more valuable as, if it applies, would include “hope” value. 

As is so often the case, it will depend on your circumstances but if you have any concerns, consult your tax adviser to either confirm the position, or otherwise assist you in organising your affairs in a tax efficient way.

On balance, I would not worry too much about the recent announcements, but you should always have an eye on future tax liabilities and potential changes to legislation that may affect you and your family. 

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