Tax Planning with Family Farm

[ALC]

Afternoon all

My elderly father is looking at his tax affairs and estate planning. The bulk of his assets is the family farm that he has owned for 30+ years. He has retired from farming and rents the entire farm to another farmer on 5 year leases. From IHT purposes he is considering transferring the farm to his son now. My understanding is that as the farm would qualify for full APR at 100% (as he has owned it fr more than 7 years and it is occupied for agriculture) there is no benefit to this as is is fully exempt in any case? Is this correct? He does not want to transfer trhe land if it is not necessary as it may cause issues in respect of the rent with it becoming payable to his children etc?

Thanks for your help

[pawncob]

When was it first let? Pre 1995?


http://www.hmrc.gov.uk/inheritancetax/p ... relief.htm

[Anthony Nixon]

Assuming the farm is currently let on a post-1995 farm business tenancy, there should be no problem with obtaining 100% relief.

If it is let on a tenancy dating from before 1 September 1995 however, it is important to renegotiate, and regrant, the tenancy to increase relief from 50% to 100%.

The other point to watch with agricultural relief is that it only relieves "agricultural value". If any of the land has value from the chance of possible development in the future, or from a possible alternative use, this part of the value will not be relieved by agricultural relief .

It is worth getting a good surveyor, with experience of negotiating agricultural relief issues with HMRC, to review the position.

Anthony Nixon CTA TEP Solicitor
Partner, Thomas Eggar LLP, Southampton and Chichester
anthony.nixon@thomaseggar.com
023 8083 1224