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Where Taxpayers and Advisers Meet

Farmer passing on farm to son

johndeere
Posts:2
Joined:Sun May 29, 2016 8:00 pm
Farmer passing on farm to son

Postby johndeere » Sun May 29, 2016 8:17 pm

Hi there.

Im looking for the best advice on how a farmer can pass on his farm to his son to avoid inheritance tax.

(37 acres of land in total)

cheeers

IanDarkwater
Posts:49
Joined:Fri Oct 31, 2008 10:55 am

Re: Farmer passing on farm to son

Postby IanDarkwater » Mon May 30, 2016 12:59 pm

This is a very non-trivial question with severe consequences if you get it wrong.

Please take 'paided for' professional advice from an expert in this field who is backed by professional indemnity insurance.

Please don't try a DIY approach on the cheap.

johndeere
Posts:2
Joined:Sun May 29, 2016 8:00 pm

Re: Farmer passing on farm to son

Postby johndeere » Sat Jun 04, 2016 12:31 am

I plan to take some solid advice, but I would like to at least know some basics to look into so when i do go to a pro i have a general understanding of options. Thank you

LozaACCS
Posts:1504
Joined:Wed Aug 06, 2008 3:55 pm

Re: Farmer passing on farm to son

Postby LozaACCS » Sat Jun 04, 2016 8:26 am

I agree that formal advice is important, this will allow the specifics of your situation to be taken into account.
The first thing to consider is that the proposed gift will be potentially liable to both IHT and CGT, for CGT purposes gift relief is available if the land broadly is a trading asset, the relief effectively passes the CGT liability down the line of succession.
A gift on death however will generally qualify for a tax free uplift.
For IHT purposes the gift will be a PET(potentially qualifying for Agricultural or Business property relief). escaping liability after 7 years.
You need to consider the implications of giving away the land in the event of say, the death/divorce/falling out with your son, for this reason you should consider using a trust or a limited company allowing you to retain some control, this however will trigger an immediate charge to IHT subject to the NRB.
Gift relief will usually be available in these circumstances.
I think it can help in these cases to keep in the mind the objective since a plan to avoid IHT at 40% will often result in a CGT liability (now or in the future) at present rates, 20%, so balance the effort,cost and risk involved with the likely net saving.
The above is a broad overview, again i would reiterate the need for formal advice


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