FARMHOUSES must be kept in “agricultural occupation” to avoid losing tax relief after a tribunal ruling last month.
The case was heard after Her Majesty’s Revenue and Customs (HMRC) appealed against an initial decision regarding a Mr Atkinson, who spent the last four years of his life in residential care.
The farm was let to a farming partnership during the four year period, and the first tribunal ruled it therefore qualified for Agricultural Property Relief from Inheritance Tax.
However, the HMRC appealed, saying the house itself had been empty for four years, and was therefore ineligible for the relief.
Catherine Vickery, rural tax specialist at accountant Old Mill, said: “This is a real blow to farmers. One of the great tax benefits of farming is the Inheritance Tax Relief you get on farmhouses and land. HMRC is seeking to strip this away, and will have been bolstered by its latest success in the courts.
“If you have concerns that someone might be going into care, ensure that the farmhouse remains fully used for the purposes of agriculture – ideally, move another partner into the house so it is not left vacant.”
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