Hope that research paper will head off tax attack
Agricultural property relief (APR) is an important relief available for those who own agricultural businesses and property.
Where available, the relief provides against a costly charge to Inheritance Tax on death (or occasionally during lifetime). It reduces the chargeable value of property at either 50 per cent or 100 per cent relief and can mean the difference between farming businesses continuing and ceasing on the death of a family member.
It is therefore crucial for a lot of families to be able to secure these reliefs on property they own.
There has been talk for many years now that the government may attack the reliefs, but thankfully the rules have remained unchanged (largely) as each successive budget passes.
However, HMRC has recently made public a research paper it has conducted into the use of APR, and its cousin business property relief, BPR, by taxpayers, to establish people's motive for tax planning. This has been a much anticipated paper as it could indicate the future of the reliefs if conclusions are drawn that people are motivated purely by the tax savings rather than for other reasons.
The results appear to be promising in that the key conclusions that HMRC has drawn from its research is that tax planning is not solely motivated by tax savings and the availability of the reliefs. From the analysis contained within the research paper, taxpayers plan their affairs for sound commercial reasons as their key motivators. Although many benefit from the reliefs, the conclusions do not point towards tax planning as being tax motivated.
So does this mean that the reliefs will come under attack in future budgets? Well, in honesty, we don’t know, but we have to take positives from the report that it hasn’t provided HMRC with a reason to push for changes. If the report had concluded that tax planning was tax motivated, we would be in a more worrying position now, potentially looking for a back up to current planning to secure reliefs.
At Whittingham Riddell we find solutions to business needs, securing APR and BPR wherever possible ensuring longevity of farming businesses and allowing succession at minimal tax cost. Please do contact us if you would like to discuss your position further.
David Jones, Director at Whittingham Riddell, Shrewsbury
