We are celebrating this festive time of year with a Christmas Selection Box of different tax reliefs and exemptions. As it is the time for giving and sharing, we hope that our "Box" will save you pounds rather than adding them!
C-H-R-I-S-T-M-A-S
A is for Agricultural Property Relief or APR.
Agricultural Property Relief (APR) is a relief from Inheritance Tax (IHT) given on UK agricultural property when certain conditions are met.
- The property must have been:
- Owned and occupied by the owner for the purposes of agriculture for at least two years ending with the date of the transfer or
- Owned for seven years ending on that date, and occupied throughout (by the owner or someone else) for agricultural purposes.
- It only applies to the agricultural value of land.
APR is given at two rates: 100% and 50%.
100% relief applies if:
- You have vacant possession of the property (because you occupy it yourself) or you have a right to vacant possession within 12 months (under the terms of any lease or licence).
- The land is let and the tenancy started on or after 1st September 1995.
- By concession: the land is let and and certain conditions are met as to vacant possession.
50% relief is available in all other cases.
There is no definition of what use qualifies as for the 'purposes of agriculture'. It includes general farming and the rearing of animals including horses on a stud farm.
- Each part of the property must be looked at separately, such as land, farmhouse, farm cottages and other buildings.
- Where APR includes cottages, farm buildings and farmhouses they must be of a character appropriate to the property, that is proportionate in size and nature to the requirements of the farming activities conducted on the agricultural land in question.
Agricultural Property Relief: hacks
- Where farm land and property has increased in value due to hope value it may take the owners above the £2m limit for the Main residence nil rate band or not be fully covered by APR. Even an approach by a developer or a sale by a neighbour can lead to increases in hope value. Consideration should be given to passing land onto the next generation or into a UK trust before this happens if the land is likely to be suitable for development.
- Consider APR (or BPR) 'double dipping' by leaving all assets qualifying for relief to someone other than your spouse, and everything else to your spouse:
- Your spouse ‘swaps’ the non-APR qualifying assets with the APR assets.
- When your spouse dies, assuming APR still applies, the assets are either relievable or out of their estate already.
Our selection box so far...
C - H - R - I - S -T - M - A -S
Links to our subscriber resources:
IHT Agricultural property relief
IHT Business Property Relief: Recycling (double dipping)
Farmers: what expenses can I claim?
At a glance:
