APR will be based on the number of people operating a farm business

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Omagh-based accountant, Seamus McCaffrey commented:

“In the case of a family farm, a spouse will not automatically qualify for AMR under the current Budget 2024 proposals unless he or she is officially registered as a part owner of the business.

“This means that a tax return must be submitted annually on the part of each person for whom APR is sought.

He added:

“This criterion can be extended to a husband and wife plus their children, if relevant.

“Simply drawing a regular salary from the business does not meet the APR requirement proposed by the Chancellor of the Exchequer in last week’s Budget.

“However there are steps that family farm, businesses can take to maximise their securing of the new APR allowances.

“It’s a case of getting professional accountancy and legal advice over the coming weeks.”

The Omagh-based accountant went on to clarify the other tax liabilities that farming businesses may be exposed to in the wake of Budget 2024.

He explained:

“Inheritance Tax is the tax on wealth at death plus the value of gifts made in the seven years prior to death.

“There are two rates of Inheritance Tax: 40 per cent on transfers on death and 20 per cent on lifetime transfers.

“Transfers within seven years of death are taxed at a rate between 20 per cent and 40 per cent.

“There is no Inheritance Tax payable on transfers between spouses nor on transfers more than seven years before death.”

Seamus referenced a number of exemptions, where these matters are concerned. He said:

“Firstly, there is the lifetime exemption of £325.000 per person and this is frozen until 2030.

“There is also the main residence NIL Rate band of £175,000 per person where the main residence is passed to direct dependent children, grandchildren, step, adopted or foster children.

“There are a number of allowances which are free of Inheritance Tax: annual gifts of £3000 per person; gifts around the time of marriage to a party to the marriage £2,500 and to anyone else £1,000; gifts out of income, not capital, where that can be demonstrated.”

For farmers who can demonstrate that they are carrying on a farm business, APR applies to the agricultural value of land situated in theUK and used for agricultural purposes.

Other Inheritance Tax Planning options include consideration of the use of a Trust and Pensions. However, the Budget proposes that wealth included in a Pension at the date of death will be liable to Inheritance Tax from April 2027.

Seamus McCaffrey concluded:

“Where it is possible to quantify an estimate of Inheritance Tax payable, a person can during their lifetime pay a premium into a Whole Life Insurance written in Trust.

“The recent Budget proposal contains many proposed changes which will have significant impact on farm families, particularly succession planning.

“As the Budget proposals are debated in Parliament and implemented, farmers need to talk through with their families, solicitor and accountant the most appropriate options for their family farms.”