Agriculture & Rural Property

Claiming Agricultural and Business Reliefs saves huge Inheritance Tax bill

The client (K) died owning a 75% share of some farmland extending to around 230 acres which was used for agricultural purposes.  Some of the land had been rented out as the client’s age meant that it was no longer practical to be able to carry out some of the day to day farming activities herself.  There were also a number of properties in and around the farm, some of which were owned by the deceased and some of which were owned by the farming partnership. Some of these properties were occupied by employees of the farm business and therefore also used for agricultural purposes.

In putting together the Inheritance Tax (IHT) paperwork on the estate, we asked HMRC to confirm that Agricultural Relief (AR) or Business Relief (BR) would apply to all of the farmland and outbuildings owned by the deceased and also to the deceased’s share of the assets owned by the farming partnership as well. For the properties owned by the deceased but used for business purposes, we asked HMRC to confirm that BR at 50% would applicable in line with the usual rule for assets of this nature.

The partnership accounts also made reference to the various business debts that had built up so we made sure that the overall position was reported to HMRC as fully and as transparently as possible so that it would hopefully be as simple as possible for HMRC to be able to review the position.

HMRC were ultimately happy to provide confirmation that the estate qualified for all of the reliefs that we had requested and, given that the value of these reliefs amounted to over £2.4 million, the saving in IHT was significant and ultimately meant that there was no tax to pay in the estate whatsoever.

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