Accountant Old Mill Rural Services warns landowners letting land under grass
keep arrangements may not get full inheritance tax relief under a new
interpretation of the law.
Where land has a hope value over and above the agricultural value – when it
is near or within a village boundary, for example – it may no longer qualify for
business property relief, rendering part of its value liable to inheritance tax,
Mike Butler, head of Rural Services, told Farming UK.
The uncertaintly follows a decision in a court case, HM Revenue &
Customs (HMRC) v McClean, where the landowner had let land, with a significant
hope premium attached to it, on a grass keep basis.
‘The tax rules have not changed at all but the interpretation of those rules
is in the spotlight. Even though the landowner had arranged for certain
maintenance matters to be dealt with in-hand, including hedge cutting, fencing
and ditching, the special commissioners decided that letting land on a grass
keep arrangement was not akin to running a business, and therefore did not
qualify for BPR,’ Butler said.
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