The Office of Tax Simplification (OTS) report on the Inheritance Tax (IHT) regime is due before the end of 2018. This follows a formal request from the Chancellor to the OTS on the 19th January 2018, Phillip Hammond specifically requested proposals on the simplification of the IHT system, practical issues surrounding estate planning, its interaction with gift rules as well as how the current system may distort decisions relating to transfers, investment and other relevant transactions.
Two key areas likely to come under scrutiny in the report are Agricultural Property Relief (APR) and Business Property Relief (BPR), the current availability of APR and BPR being a key driver behind the investment in farmland in the UK. Whilst many can, and will, speculate as to how the current IHT regime may be tweaked it is more than likely that any changes arising from the OTS review will be less advantageous to those holding farmland than under the current regime. Currently land farmed in hand for more than 2 years or let on a tenancy (post 1995) and owned for 7 years will receive 100% relief on their agricultural value, in addition land farmed in hand should also attract Business Property Relief on any assets used by the farming business that have a value in excess of their agricultural value, this is of particular relevance to land with development potential.
As tax legislation always evolves, so must you, all too often we see clients bury their head in the sand and hope that everything will fall in to place. It is never too early to plan, here at Lister Haigh we work alongside some of the region’s leading solicitors and accountants to ensure our clients remain best placed to hand their assets down in a clear, logical and cost effective manner. Do not hesitate to contact our specialist team of Chartered Surveyors on 01423 860322.