Agricultural Property Relief - The basics

Inheritance Tax (IHT) is complex but the basic idea is simple. It is a Tax on chargeable transfers made during a person’s lifetime and also on the assets left by a deceased on death. There are some exemptions and reliefs available to reduce the amount of tax payable and in this article we are looking at Agricultural Property Relief (APR).

Nobody wants to pay more tax than necessary. It is therefore important to understand and apply properly the reliefs that are available.

If you have owned agricultural property, that is part of a working farm, in the UK, Channel Islands, Isle of Man or European Economic Area for more than 2 years (or for more than 7 years if you have let it out) you should be able to pass on some or all of the property free of Inheritance Tax in your Will or before you die.

Farmland can also qualify for APR if, for example, it has been dedicated to wildlife habitats. APR may also be available for farm buildings, used for farming purposes, if the size of the buildings is proportionate to the size of the farming activity. This aspect can be complicated with a number of issues to be overcome before the relief is granted, particularly where a Farmhouse is concerned.

APR is not available for farm equipment, livestock or harvested crops but these may qualify for Business Relief as a business asset.

APR is usually given at 100 per cent but it may only be available at 50 per cent, depending on the type of property involved and how it is owned. It should be remembered that the relief is given on the agricultural value of the property, which may be different from the open market value.

We have a dedicated team of lawyers specialising in Inheritance Tax issues. Our team have the experience and expertise that will provide you with peace of mind and confidence that you will receive advice and assistance to suit your needs. When undertaking IHT planning your overall circumstances should always be considered. It is vital that specialists are consulted to ensure that you receive the correct advice and the correct action is taken.

We have solicitors dealing solely with trusts and estates work including a number who are members of Solicitors for the Elderly and also the Society of Trust and Estate Practitioners.

Taking specialist advice on complicated issues like APR will help ensure that matters can be arranged as efficiently as possible. In this way full use can be made of the reliefs available so that as much of the value of the assets you have worked hard for pass to those you wish to receive them.