Following HMRC’s recent announcement about a change in property values linked to the annual tax on enveloped dwellings (ATED), a leading specialist agriculture accountant at MHA is warning all farmers to take action to safeguard their interests.

David Missen, Head of the Agriculture Sector at MHA, the national association of independent accountants, said: “Many farmers believed this tax didn’t apply to them because, when originally announced, it only caught the small number of properties valued over £2m - and farmhouses under this threshold are currently 100% relieved.

“Now though, with the limits reducing to between £1m - £2m in 2015/16, and £500k - £1m in 2016/17, a far greater number of properties will fall within the scope of ATED – indeed in many parts of the country a decent sized tied farmworker’s cottage may even fall within it. Moreover, it must be remembered that this is a relief rather than an exemption, so it must be claimed for rather than assumed.”

ATED is payable by companies and partnerships with a corporate member that own UK residential property valued above a certain amount. HMRC has recently brought all previous guidance together in one paper and re-issued it.

Missen adds: “Whilst ATED currently affects a minority of farms (as family partnerships tend to be the preferred trading vehicle), there are a substantial number of trading entities that include a corporate vehicle within a partnership structure, often for historic reasons. Farms in this situation need to be thinking about how this tax affects them and possibly taking steps to reduce their liability, now and in the future.”