Our team of agricultural solicitors specialise in succession planning for farms and rural estates. We can assist you with tailored advice on specific tax planning, including inheritance tax and capital gains tax, enabling you to secure your wealth and assets with bespoke wills packages.
How can I protect my estate assets?
A will is a vital document in protecting your estate assets, for your heirs. Creating a will can cover vital aspects which include effective inheritance tax planning, succession to agricultural assets and division of shares in agricultural business or partnership situations.
A trust can also be created to protect estate assets. They can be created under the terms of a will to control how assets are passed following death. Trusts can also be used during an individual’s lifetime to ringfence assets to ensure they are kept for specific beneficiaries or to be used in a specific way. Preserving the commercial viability of the land is essential.
Do you pay inheritance tax on a farm?
A farm can qualify for agricultural property relief (APR) and business property relief (BPR). APR will be applied first, then BPR can be applied to relieve any value above the agricultural value. Both reliefs are applied before the application of the nil rate band and residence nil rate band which means that well advised farming estates can often pass substantially free of inheritance tax.
What is agricultural property relief on death?
Agricultural property relief is a relief from inheritance tax. Where the conditions for APR are met, the agricultural value of any gifts of agricultural property transferring on death will be reduced for the purposes of calculating inheritance tax on those gifts.
In order to qualify for APR, the property must have been either:
- Occupied by the giver for agricultural purposes throughout a two-year period ending with the date of the death; or
- Owned by the giver throughout a seven-year period ending with the date of death, and occupied (by the giver or another) for agricultural purposes throughout that period
Where one of the above conditions apply, the agricultural value of any gifts can be reduced by 100% or 50%.
Is agricultural land exempt from capital gains tax?
Agricultural land is not exempt from capital gains tax and would qualify for the non-residential rate of 10% or 20% dependent on the landowners’ income. If the land is sold as a business, Business Asset Disposal Relief may be available in order to pay CGT at a rate of 10%.
Where a farmhouse or residential property forms part of the gain, the residential rate of 18% or 28% will be applied.
Our expertise in action
- Acted in relation to the estate of a deceased farmer who operated a partnership and a contracting company. We advised on the use of APR/BPR and on an ongoing trust for the family. The matter was complicated by the land being owned by different parties including another family trust and a living relative.
- Acted for the owners of agricultural land in Cheshire which surrounded their family home and was used by their family business. The land had been passed down through generations and we advised on the transfer of the land to trusts for asset protection and Inheritance Tax purposes.
- Acted for the owners of agricultural land in North Wales. The land had been inherited and it was of great importance to the clients to plan for the future succession of the land, we advised on this in a tax-efficient manner including the transfer of land to trusts.
