Farmers could lose important tax allowances on traditional buildings if they are allowed to stand idle or fall into disrepair, says a specialist rural accountant.
Although traditional buildings are an integral part of many farmyards, a number stand abandoned because they are no longer suitable for housing livestock or big enough to accommodate modern machinery. HM Revenue & Customs is questioning whether these buildings should qualify for Agricultural Property Relief from Inheritance Tax, said Mike Butler of Old Mill Rural Services.
“This is a serious and worrying trend, potenitally rendering thousands of farmsteads liable to a heavy tax burden,”
The possibility of converting attractive traditional buildings into residential dwellings or commercial units meant they attact an inherently high value despite their uotaded agricultural purpose, Mr Butler said.
Although APR only covers the agricultural value of the building, any excess could be covered by Business Property Relief, as long as the buidings was used in the farmer’s own business.
To avoid a large inhertitance tax bill, farmers whould take steps to ensure buildingsremianed in constant agricultural use, and retain proof of this, Mr Butler said. “Keep photographic evidence of buildings in use and ensure they are on insurance documents as part of the business, he said.
“Well-maintained buildings provide persuasive evidence you want to keep them in serviceable agricultural use and by showing the repairs throught eh farm accounts, you clearly demonstrate the building is still important to the farming operation.”