A DEATH in the family is hard enough to deal with but having to sell the family home in order to meet resulting tax demands must be the final straw, especially when the property may have been in the family for generations.
And that’s all the more so when some advance tax planning could have avoided or at least limited the damage, according to a local chartered surveyor.
Graeme Bruce, from the Alnwick office of Youngs Chartered Surveyors, said: “Given the significant uplift in agricultural property values over the last few years and a greater level of scrutiny from the Inland Revenue in terms of the application of Agricultural and Business Property Reliefs, it is becoming ever more pressing to put in place some strategic tax planning in order to protect the family farm or estate and mitigate so far as possible potentially significant inheritance tax liabilities.”
Issues which need to be considered in order to reduce tax liabilities he suggests include Potentially Exempt Transfers (PETs), conversion of old-style farm tenancies to qualify for 100 per cent Agricultural Property Relief, treatment of the farmhouse and cottages, appropriate letting of the land to maximise reliefs, treatment of non-agricultural and diversified land uses, insurance protection against tax liability and treatment of land with hope value for potential future development.
“For some landowners, advice will have already been sought and taken,” saaid Graeme.
However, for others it may be prudent to consider having a tax health-check as you may find your liabilities are greater than you think. Equally, there may be ways of resolving this before the taxman takes more than he needs to.”