Quarterly News

APR goes on its travels

Agricultural Property Relief (APR) is a key inheritance tax (IHT) relief that can reduce the value of agricultural property in an individual's estate for IHT purposes to nil. It is especially valuable when agricultural property is not comprised within a business and so is not eligible for Business Property Relief as an alternative.

Until now, one of the key conditions to obtaining the relief has been that the agricultural property was located in the United Kingdom, the Channel Islands or the Isle of Man. This is now extended to include qualifying property anywhere in the European Economic Area (EEA). This comprises all the EU countries plus Norway, Iceland and Liechtenstein.

Going forward this means that an individual owning agricultural land in, for example, France could now qualify for APR on the value of that land in their estate at death or pick up the relief if they were to transfer the land into a trust in their lifetime and possibly avoid or mitigate their IHT liability accordingly.

The relief also applies retrospectively because the UK government has been forced to remove the discrimination which existed in favour of UK land. This means that there may now be an opportunity to make a claim for repayment of tax.

If IHT was paid on property in the EEA after 23 April 2003 and the property would have met the conditions to qualify for APR then the tax paid can be recovered by making a claim to HMRC. Normally a tax repayment has to be made within six years which would now be impossible for tax paid early in 2003. HMRC are required to allow claims to be made by 21 April 2010 where they would otherwise be out of time.

Lifetime gifts

It is not just IHT which might be repayable. The gift of land and property from one individual to another during lifetime is usually chargeable to capital gains tax (CGT) unless gift relief is available. In most cases this is only available on trading assets but where a gift of land or property qualifies for APR, the gain can be deferred for CGT purposes. If for example an individual had gifted agricultural land in Eire to their children in 2005, the individual may have paid CGT on the gain. A gain is essentially the difference between the market value of the land at the date of the gift and any allowable capital expenditure. A claim could now be made to defer the gain until the children dispose of the land and that would give the parent a repayment of CGT now.

Please contact us to review your family's IHT and CGT position if you consider this may be beneficial to you.

News Highlights

Plant capital allowances

Have you installed new 'plant' in a building used for the purposes of your trade recently? The read on.

Every pound counts

The AIA has now been increased from £50,000 to £100,000 in the Finance Act 2010.

• back |
• top