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Agricultural Property Relief and Inheritance Tax- 08/06/2009
Am I right in thinking that there has been a recent change in the rules for Agricultural Property Relief on Inheritance Tax ?
Most landlords were probably aware that Agricultural Property Relief (“APR”) was 100% for vacant land and 50% for land subject to an old fashioned tenancy covered by the Agricultural Holdings Act 1986. Tenancies granted after 1st September 1995 for farms or farm land were automatically Farm Business Tenancies unless special rules applied to give the tenant protection under the 86 Act.
The problem for landlords and tenants was that a landlord could not gain 100% APR unless the tenant surrendered the old tenancy and took on a Farm Business Tenancy. Such an arrangement may not have been so beneficial for the tenant with the loss of succession rights as an example. Also this could lead to Capital Gains Tax and Stamp Duty Land Tax being payable.
Pursuant to the Regulatory Reform Order 2006 and recent changes landlords and tenants can now complete a surrender of the old tenancy and re-grant of a new tenancy of precisely the same land on the same terms which will not remove tenants succession rights (if they exist), but which will enable a landlord to claim 100% APR on the land and which will not lead to the tax payments if the transaction qualifies and is handled correctly.