Wednesday, 19 September 2012

WARNING - Diversification Could See Farmers Face Inheritance Tax

There is much in the press informing us of how many farmers are branching out into other activities/businesses.
 
The potential to diversify is massive. We hear about farmers diversifying into tea rooms, riding schools, bed and breakfast, outdoor activities and even a specialist bra supplier (Ample Bosom) in order to keep their main income healthy.
 
However, farmers must be aware of the potentially dangerous inheritance tax implications in diversifying their business.
 
Changes in how land is used can affect the farmer's entitlement to Agricultural Property Relief (“APR”) for Inheritance Tax (“IHT”). APR is a valuable relief for owners of rural property but it can cause problems when farmers diversify i.e. if agricultural land and buildings are adapted for alternative purposes they may not be entitled to APR.There are also important rules regarding not only the occupation but the length of ownership of the property. Farmers and land owners who have decided to change, or are considering changing, the use of their land, should be aware that they can lose APR. If they do so, to mitigate IHT, they must try and ensure that they qualify for the alternative, Business Property Relief (BPR.)
 
For further information see:
or contact Latimer Hinks on 01325 341500
Anne Elliott is a member of the Agricultural Law Association, as well as a Recommended Professional for the Tenant Farmers Association. In 2011, she was cited in the prestigious Legal 500 directory for both her work on Inheritance Tax and in the category of Agriculture and Estates. This was followed by a recommendation in Chambers 2012 for her expertise concerning, among other areas of law, the Agricultural Holding Act.
 
 

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