Farmers Warned About UK Inheritance Tax Grab
Thursday, July 10, 2014
A UK accountancy firm that specializes in advising rural businesses has warned that plans to cap the total amount of tax protection that an individual can gain from trusts will leave farm owners with new Inheritance Tax (IHT) and Capital Gains Tax (CGT) liabilities..
Andrew Vickery of Old Mill explained that proposals currently being
considered by HM Revenue and Customs (HMRC) will have a particularly pronounced impact on
family farms due to rising property values and the increasing number
of farm cottages that are let out. Trusts are often used by family
farms because let properties lose tax reliefs associated with being a
business asset, and also to ensure that properties are able to be passed
down generations without incurring substantial tax liability.
Up until now it has been possible to set up multiple trusts to gain
multiple exemptions. If the proposals are implemented, trusts set
up from June 6, 2014, will share just one overall exemption of
GBP325,000 (USD556,755) for an individual's lifetime. Vickery warned that the
change would mean farmers will have to find other ways to pass assets
down the generations without incurring high IHT and CGT bills, but said "there remain a
good number of other options available."
HMRC is currently holding its third consultation on the subject. Last
month, the Institute of Economic Affairs described the move as a "punitive
step" against passing on wealth.