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Budget Changes Could Impact on Farming Families

As with most budgets, there is speculation surrounding inheritance tax (IHT) changes. The chatter is especially strong at the moment due in part to the recent recommendations by the All-Party Parliamentary Group for Inheritance & Intergenerational Fairness (APPG IIF). The word is there could be changes focussed particularly on Agricultural Property Relief (APR). APR is similar to the more familiar Business Property Relief (BPR) code in the way in which it operates. As the name suggests, APR looks specifically at assets that are used in the business of farming. These assets include:

  • farm cottages;

  • farm buildings;

  • farmhouses;

  • agricultural land/pasture;

  • woodland buildings used in the rearing o livestock or fish.

APR cost the Treasury around £515m in 2017-18.

We understand the new chancellor, Rishi Sunak, in his upcoming March 11th budget, is pondering eliminating some of the IHT protections for these assets , thus affecting the current status and use of APR.

One of the drivers for these changes is reported to be a clamp down on wealthy individuals exploiting the relief. This strategy works by purchasing farmland, with the ultimate intention of mitigating IHT on a large part of their estate and not actually running a farming business to provide goods and services and generating a profit.

This tax avoidance is deemed to benefit wealthy investors and trusts who buy land because of the favourable tax treatment, rather than the intended, vis-a-vis, active farmers. The potential loss of the relief is obviously being questioned by those who regard APR as a vital way of avoiding a large tax bill when the business passes between generations and thus importantly, keeping it within the family.

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It is always important to review your circumstances as family life evolves and when cultural, political and tax legislation changes occur. Keep up to date with developments and seek expert advice from firms like 40RTY.

Estate Planning is an integral part of our service. As well as minimising the effects of IHT, many families wish to ensure the preservation of their wealth through several generations by making provision for children, whilst also considering events such as divorce, bankruptcy and accounting for later-life care.

Contact Jules for more information: julesj@40RTY.co.uk - 07814 838 660

Jules Jack