Farmers are at risk of paying more inheritance tax than they need to by failing to put their affairs in order, an accountancy firm has warned.
HMRC data shows that IHT receipts earned the treasury £5.4bn in 2018/19, an increase of £166m on 2017/18.
Almost three-quarters of this came from estates worth £1m or more, with liable estates paying £179,000 on average.
Farming families who might be affected should seek out expert advice well in advance to help mitigate future IHT bills, said Heather Bright, tax partner at Moore Thompson.
“IHT receipts have been growing steadily since 2009, mainly as the result of a freeze on the nil-rate band at £325,000,” said Ms Bright.
Residence nil-rate band
“In the past few years, to deal with growing house prices, the government has introduced the residence nil-rate band,” she said.
This means from April next year a married or civil partnered couple can effectively pass on up to a million pounds of their estate tax-free as long as their main property is transferred to direct descendants, such as their children.
More information on the residence nil-rate band is available on the HMRC website.
Landowners may also be eligible for agricultural property relief and business property relief.
“There is a lot that can be done to manage an estate, including making gifts to family or charities, that could help to significantly reduce either the chance of paying IHT in the first place or the amount due after a person’s death,” Ms Bright added.