An amendment to the Finance Bill will help some farming families threatened by budget proposals to change the rules on loan interest and inheritance tax.
The original proposals would have completely removed the ability to reduce the value of an estate by setting off borrowings secured on assets which did not qualify for IHT relief but which were taken out to fund the acquisition of qualifying assets such as farmland.
Exchequer secretary David Gauke recently confirmed that an amendment would be brought forward so that the new rules would only apply to loans taken out after 6 April 2013 so that anyone with existing business loans secured on personal, IHT chargeable assets will benefit from the existing rules until those loans are repaid.
“This might present a planning opportunity and a consideration for those looking at restructuring their debt or prioritising repayments,” said Rob Hitch of accountant Dodd & Co. “Anyone with business debt already secured on personal assets may wish to review their affairs to maximise opportunities presented by the Treasury’s changes.”
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