Probate advice for farm and land owners
Combining sensitivity with a practical and straight forward approach, our expert probate lawyers have particular experience in administering large landed and farming estates and in dealing with the unique complexities of such estates.
We understand what it means to lose someone and that each estate is unique, which is why we offer a bespoke service, delivering support tailored to your individual needs. Our team’s expert probate advice has delivered peace of mind to generations of executors, helping them to understand and navigate the estate administration process and achieve tax efficient succession.
If you are dealing with the estate of a landowner or farmer it is important to assess the intricacy of the estate and the type of support you need. Farmland and other agricultural assets, even possibly the farmhouse, may qualify for agricultural relief. Our team can offer expert probate advice to help you understand and navigate the process of administering an agricultural estate and claiming the relevant reliefs. By working closely with our Tax Planning, Trusts, Residential Conveyancing, Agricultural and Owner Managed Business teams, we have the depth and breadth of experience to advise on every aspect of probate and beyond to obtain the best result for the family.
What is agricultural relief?
Agricultural relief is a relief that is allowed to reduce the value of an estate which is subject to Inheritance Tax where the land and buildings qualify as agricultural property. The relief applies to property in the UK, the Channel Islands, the Isle of Man and the European Economic Area.
The relief is available where the deceased was a sole trader or a partner in a farming partnership. Relief may also be available for the deceased’s shareholding in a farming company. However, care needs to be taken to identify who actually owns the land and who is in occupation. Thought also has to be given to other potential assets owned by the business.
How do you qualify for agricultural relief?
In order to qualify for the relief, there must be agricultural land or pasture which is occupied for agricultural purposes. Agricultural purposes is not defined but is generally understood to be for food production. Where there is qualifying land, the relief can extend to the woodlands and buildings that are associated with and ancillary to the farmland.
In order to qualify for the relief, the buildings must be of a “character appropriate” to the land.
The land will need to be owned for at least two years to qualify for the relief. If the land is owned but occupied by someone other than the owner for agricultural purposes then the land will need to be owned for seven years.
Do you pay tax on farmland?
If the land is used for agricultural purposes and has been owned for the required period of time then the agricultural value of the land is relieved from Inheritance Tax. However, the market value of the farmland can be different, sometimes significantly such as where there is development potential, to the agricultural value which is relievable. In these circumstances it may be possible to instead apply business relief to the difference in value and so avoid Inheritance Tax on the full market value of the farmland.
Does a farmhouse qualify for agriculture relief?
A farmhouse may qualify for relief provided it is of a character appropriate and is occupied by a farmer together with the adjoining farmland. This will be very fact specific as the extent of land farmed, the size of the farmhouse, the time spent farming and the locality of the farm will all be factors, alongside others, in considering if a farmhouse will qualify for relief. If the house does qualify for relief it will only be able to attract relief on the agricultural value of the house and not the full market value.
What about farm cottages?
It is possible to claim agricultural relief on a farm cottage but it will depend on how the cottage is occupied, for example by a farm worker. If the cottage is no longer connected to other agricultural activities on the farm, such as where the cottage has been let on an assured shorthold tenancy, it may still attract business relief if taken with a number of factors the cottage only forms a small part of the overall farm business.
What if not all the assets of the farming business are used for agricultural purposes?
In many farm businesses diversification has taken place over a number of years in order to increase the profitability and income streams for the farm owner. This diversification may affect the availability of agricultural relief on the business as a whole. However, in some cases business relief may be applied instead.
How do you value a farm?
In order to value the farm all aspects need to be considered, such as the land, the buildings and houses, and also the machinery, crops and livestock. If the land is farmed through a partnership or limited company then the partnership interest or shareholding will need to be valued taking into account the underlying asserts of the business. In valuing a farm it is sensible to work closely with a good agricultural surveyor and the farm accountant.
How does any Inheritance Tax get paid?
If there is Inheritance Tax to pay, this becomes due to HMRC after six months from the end of the month of death. After that time interest becomes payable on any outstanding Inheritance Tax. It is possible to pay Inheritance Tax on certain types of assets, such as land and some business assets, in 10 equal annual instalments (or until the asset is sold, if sooner). This can help with cash flow if an estate is made up of largely illiquid assets.
More about the team
We are a team of 11 specialist probate lawyers – one of the largest and most experienced in the South East, which means your matter will be dealt with effectively, efficiently and there will always be a member of the team available to help.
As a full-service law firm we can draw on our years of expertise to help administer even the most complex estates to provide our clients with peace of mind.
Our accreditations include:
- Most of our team who supervise and manage the preparation of wills are members of The Society of Trust and Estate Practitioners (STEP). It has published a Code for Will Preparation in England and Wales and as a firm, we adhere to this code in relation to work we do in connection with wills in this jurisdiction. We are independent and are not part of any other company or group. You can view the code on their website: www.step.org/ or we can send you a copy on request.
- Band 1 in Chambers HNW and The Legal 500
- Listed as one of the top law firms by ePrivateClient
- Kent Business Legal Sector Review 2021 – scored us as number 1 for private client quoting “ TSP leads the pack for Private Client once again”
- Lexcel - The practice is accredited by Lexcel for our excellence in legal practice management
- All of our partners are also listed as Citywealth leaders.
