Inheritance Tax Review shows encouraging prospects for Farms and Estates
The long-awaited Inheritance Tax Review from the Office of Tax Simplification, which was commissioned by the Chancellor of the Exchequer this year, includes some encouraging words for farming families and rural Estate owners.
The review sets out an explanation of the issues and complexities of IHT, gives an overview of concerns raised by the public and professional advisors during the review and then makes recommendations. This first report examines the administrative issues that people complain about and which were raised in the responses. The second report covering other wider areas of concern to people will follow in Spring 2019.
Sean McCann, chartered financial planner at NFU Mutual, said: “This report has some very welcome news for farming families. Although it acknowledges that inheritance tax is fiendishly complex, the generous reliefs used by farming families are singled out as being simple and straightforward.
“Agricultural Property Relief (APR) and Business Property Relief (BPR) help farms to be passed down through generations by reducing and in some cases eliminating hefty tax bills when someone dies, encouraging farmers and agricultural business owners invest for the long term.
“It was good to see a spotlight shone on the taxation of furnished holiday lettings, which are commonly used by farmers to diversify the farm business. In general, these lettings are treated as a trade for income tax and capital gains tax but aren’t normally eligible for Business Property Relief, meaning they are subject to inheritance tax. It’s an anomaly that continues to catch out farming families.
“A main feature of the Review was the complexity of inheritance tax and the stress and anxiety that can cause for many people who try to navigate the system. The report acknowledged the increased admin that is required for anyone claiming APR or BPR.
“At eighty pages for part one, the sheer size of this report shows the scale of the problem. Simplification of inheritance tax is long overdue. The second half of this report is due in the spring and it’s likely we’ll see some recommendations for fundamental changes to inheritance tax.”
The latest tax receipts show the taxman is on course to take a record £5.5bn in inheritance tax from families this tax year with £3.3bn taken between April and October.