If you are balancing a number of enterprises on your farm, including let cottages, it may be time to take a look at your succession planning as Inheritance Tax at 40% is a rather hefty tax to pay and can decimate your asset’s value.
Yes, there are reliefs, but forward planning is essential to ensure you take can advantage of them. Following the Balfour Case, almost 10 years ago now, it is seen as the way forward in which to base your farm or estate succession strategy to take best advantage of the reliefs, including Business Property Relief (BPR).
In a nutshell, the business needs to be structured in such a way that the majority of its activities are seen as trading and not investment. More than 50% of the asset value, management time, profit and turnover need to be related to enterprises which are classed as trading – such as in-hand farming- as opposed to investment – like let property, for example. If this can be achieved, then potentially 100% of the assets qualify for BPR.
If you would like help with your succession planning, then please give Richard or Liza a call at G Herbert Banks.