Agricultural Property Relief (APR) and Business Property Relief (BPR) are set to undergo changes..
For many years, rumours have been going around that Agricultural Property Relief (APR) and Business Property Relief (BPR) will be 'simplified'. At the end of 2018, the Office of Tax Simplification (OTS) issued an initial report which covered multiple areas of inheritance tax (IHT) one of which was the use of APR and BPR and pointed out areas which cause the complexity.
At the moment, APR and BPR provide key reliefs for farmers that allow them to transfer farming businesses across generations.
The report raised specific questions as to whether the way in which APR and BPR apply influences the way in which farmers make their decisions.
Some of the issues raised were:
- whether or when to sell the farm or to transfer it to the next generation;
- is it better to let out the farm or farm in-hand
- who should live and use the farmhouse
- should the farm operate under a company or a partnership
- should the farm diversify or hold non-trading assets
OTS suggested that one of the areas that needed further consideration is the overlap between APR and BPR. A further report is to be released this year which will include the recommendations for the proposed simplification. We will provide further information when further reports are published.
If changes are recommended or announced then it may be necessary to revisit existing structures to ensure that future plans are as tax efficient as possible. If you would like to discuss this further, please do not hesitate to contact the Private Client department on 01245 228107.