Inheritance tax (IHT) and Agricultural Property Relief

There has always been the thought that there are 2 certainties in life being death and taxes. A recent commentator also put forward that the only reason assets are sold is the 3 D’s, Death, divorce and debt. Divorce and debt are controllable but death is an unknown. While this is the case we can still plan for the eventuality.

There has always been the thought that there are 2 certainties in life being death and taxes.  A recent commentator also put forward that the only reason assets are sold is the 3 D’s, Death, divorce and debt.

Divorce and debt are controllable but death is an unknown.  While this is the case we can still plan for the eventuality.  The first two questions which need to be addressed are:

Do you know if you have an IHT liability?
Have you got wills in place and are they up to date?

These two questions are very important for all RNS clients to address but can have particular significance in the agricultural sector where there are often significant assets involved.

Agricultural Property Relief (APR) is available at 100% and it is often assumed that as farmers we have no problem, even with high land values.  This is not always the case as some relief is only 50% and there also may be assets which are not covered by APR, such as building development value, excess balance sheet cash or  part of the value of the farm house. 

Adrian Ingleton the RNS agricultural expert emphasizes the importance of IHT reviews, “ In the first instance a list of assets needs to be prepared and then RNS can assist in calculating any reliefs and establishing whether there is a liability and if so the options to consider.”

Adrian can be contacted on Adrian.ingleton@rnsca.co.uk or 01652 655111.

Capital Allowances – Check the timing

With the current level of AIA being £500,000 farmers and indeed most capital intensive clients have been looking at spending significant sums on the upgrade of plant and machinery. There can often be long lead times on high value items that may impact upon the availability of capital allowances.

When can you claim?

On the assumption that the item qualifies for AIA, you can only claim AIA in the period you bought the item.

The date you bought it is:

  • when you signed the contract, if payment is due within less than 4 months
  • when payment’s due, if it’s due more than 4 months later

If you buy something under a hire purchase contract you can claim for the payments you haven’t made yet when you start using the item.

Adrian notes that “With such large sums potentially involved it is important that careful planning is undertaken in conjunction with the partner who handles your affairs”

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