Is your farm a work of art?

In our part of the UK, we are lucky enough to have several heritage assets on our doorstep, ranging from castles to national parks. But some farmers and landowners are looking even closer to home (i.e. their own farm or land) for heritage assets, all in the name of limiting the impact of the new restricted inheritance tax reliefs.

You will probably all have heard by now about how, from 6 April next year, the 100% relief from inheritance tax will be capped at the first £1m of combined agricultural and business property value. What you might not have heard of is HMRC’s exemption from these taxes, known as ‘conditional exemption’.

Historically reserved for works of art, this incentive is only available if the land in question is deemed to be of “outstanding scenic, historic or scientific interest” by both HMRC and Natural England. Following an assessment process, if the land is deemed ‘outstanding’, then its owners are offered the exemption of both inheritance tax and capital gains tax when they either die or gift the land. This also extends to buildings on that land, even if they are not ‘outstanding’ by their own merit.

Sounds too good to be true? There are a few caveats to bear in mind. To qualify for the scheme is a challenge in itself; the land must truly be ‘outstanding’ and the thresholds are high. And if your land does qualify, your beneficiaries must agree – known as ‘the undertakings’ – to look after the land and, most pertinently, ensure it is available for access by the general public. In addition, any inheritance tax will become immediately due if the land is sold in the future. Taxing times, indeed.

As the implementation date for the new inheritance tax relief tariffs approaches, many farmers and landowners are planning what to do next. The only way to truly ensure you’re prepared is to speak to professional advisers, who can advise you of the best action to take. By spending a little money on legal advice, you can save a great deal more for your family in the long run.

For advice on preparing your farm or land for the inheritance tax changes, contact the team at 01768 347 084.