Changes to Planning Laws may have IHT Impact for Farmers
Under the new Town & Country Planning rules, where the necessary conditions are met, farm buildings may be converted into up to 3 residential dwellings without obtaining the normal planning permissions.
This relaxation of the rules will make developments easier and is likely to increase the value of some farms.
Agricultural property relief (APR) provides up to 100% relief against inheritance tax for qualifying farm assets such as land, farm buildings etc.
However, agricultural property relief is only available in respect of the ‘agricultural value’ of land – that is to say that any value attributable to development potential will not benefit from inheritance tax relief, unless the conditions for business property relief (BPR) are also met in which case BPR may be used to top up APR.
As well as considering the agricultural value as compared to the market value of land, farmers and their advisers should carefully review the availability of both APR and BPR and consider whether any actions may be taken now to strengthen the position.
See our December 2014 Tax Update for more recent cases.