Tax Flashcards
What is APR?
Agricultural Property Relief
Is a relief to reduce the amount of Inheritance tax farmers and landowners have to pay when farmland is passed to the next generation after a death.
This helps farms stay within the family to allow them to continue to look after the countryside and produce food for the country.
Why is inheritance tax and APR + BPR a hot topic at the moment?
The government has now announced it will change the rules for Inheritance Tax, including APR and BPR (Business Property Relief) on farmland and business assets.
This means an effective tax rate of 20% on agricultural assets valued over £1 million – although there are other reliefs available that can also be used.
What is BPR?
Business Property Relief
Business Relief is a longstanding relief from inheritance tax. When the shares of a company qualify for Business Relief they can be passed to the next generation free from inheritance tax. To benefit from the relief, qualifying shares must be owned for at least two years and at the time of the owner’s death
How do you qualify for APR?
Agricultural property that qualifies for Agricultural Relief is land or pasture that is used to grow crops or to rear animals.
To qualify for relief, a property must be part of a working farm in the UK. It can be owner occupied or let.
Some property does not qualify for APR, what does this include?
farm equipment and machinery
derelict buildings
harvested crops
livestock
property subject to a binding contract for sale
How might you advise a client on their future IHT planning?
Within my expertise I can give a value of a farm to assist with calculating the value of assets that may benefit from APR but I am not an accountant and cannot give tax advice so would suggest a client consults their accountant for specific tax advice concerning their assets.
What guidance is there for determining whether a farmhouse should be considered for APR?
HMRC Guidance. Guidance on whether a property is “character appropriate” it outlines the specific characteristics a property would need to have to be considered for APR
Can you outline some of the characteristics?
Would a reasonably informed person regard the property as simply a house with land or as a farmhouse?
Is the farmhouse appropriate by reference to its size, layout and content with the farmbuildings.
What are the main taxes that concern land owners/ working as a rural surveyor?
IHT and Capital Gains Tax
Explain capital gains tax
Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value.
