CGT & IHT Relief for Farmers & Landowners - Managing the Risks

Introduction

The impact of reduced APR and BPR as announced in the October 2024 Budget has filled the post-Budget headlines. Farming has benefitted from generous IHT and CGT reliefs for a number of decades. Such strong tax reliefs have previously encouraged many investors and ‘lifestylers’ to purchase farms and landed estates resulting in strong farm values. The ‘rollover buyer’ has been prominent in farm purchases. We will focus on the taxation of farming for the environment and ELMs (Environmental Land Management) subsidies as mentioned in the Spring Budget 2023 and 2024 and is now the subject of a working group. We look at CGT and IHT guidance in the gap before full HMRC guidance. The Spring 2024 Budget has confirmed APR on environment projects from 2025 but the Autumn Budget has reduced the rates of relief.

HMRC have blatantly attacked anyone taking advantage of the generous CGT/IHT reliefs particularly with regard to ‘investment’ and ‘landlord’ status together with any private use - tax advisers have been kept very busy by this approach. A good deal of farm succession planning is based on the historically strong capital tax reliefs. The changes of the Budget on 30 October 2024 have caused alarm for succession. We consider the Butler case of the wedding barn and the impact on IHT planning for ill health. We also consider farm diversification being held to be an investment generally and look at radical restructuring, as well as the Kingsworthy Meadow Fisheries case of the need for more services.

This virtual classroom seminar looks at the certainties and uncertainties of CGT and IHT relief for farmers and landowners, embracing what action can be taken now and tax planning around the risks of uncertainty and maximising the criteria to achieve the relief with focus on the drop of APR/BPR relief to 50%.

What You Will Learn

This live and interactive session will cover the following:

• Focus on Autumn Budget 2024 regarding reduction of APR/BPR to 50%
• The impact of small increases in the rates of CGT
• Consideration around the Budget 2023 & 2024 announcements of the working group review on eco system/ELMs and APR to be extended for ELMs from 2025 and tax planning whilst results awaited
• Review of what to do with APR/BPR relief claims in the gap before the results of the working group and now
• The importance of CGT/IHT planning before contracts are signed, especially on new ELMs agreements
• Impact of the Rock Review and the rejection of the 8 year FBT and APR
• The role of Woodland Relief and Heritage Property revival post-Budget
• The impact of farming for the environment on all IHT and CGT planning and the practical implications on probate and all succession planning
• The importance of the farm partnership agreement and Wills for IHT and CGT protection amongst all the updates and the impact of TRS (Trust Registration Scheme)
• 50% BPR on non-partnership property - now 50% core rate, impact on overall planning
• 50% APR on AHA tenancies - now 50% core rate but 100% relief needed on £1million
• Tenancy reform - the impact on IHT AND CGT planning
• CGT planning on tenant farmers surrendering tenancy for capital sum
• CGT and IHT planning on farmers selling large and small development areas (Foster case) - with focus around deferred consideration and BPR on hope value
• CGT and IHT protection around permitted development rights option and promotion agreements
• Farm survival post the APR/BPR reduction and the subsidy gap, the importance of the tax efficient development gains, diversification and succession planning
• IHT protection of grazing agreements (Gill case)
• IHT efficiency of the Contract Farming Agreement (CFA) and all potential farming agreements, e.g. Share Farming and Joint Ventures - the pressure post Rock Review calling the CFA a sham
• The Farm Will and practical probate consideration as part of IHT succession planning and providing for IHT liabilities in Will planning under the Hall case
• Consideration around lifetime gifts of the farm, holdover relief and gifts with reservation of benefit and failed PETs
• The IHT and CGT efficiency of the ‘lifestyle buyer’ - impact of the farm property market
• The new Tanner case with BPR disallowed on 5 holiday units - the need to restructure not just “push over the line”

Recording of live sessions: Soon after the Learn Live session has taken place you will be able to go back and access the recording - should you wish to revisit the material discussed.