Registering an incorrect occupation could cost Shropshire farming families
A simple mistake when filling in a death certificate for a loved one could be costing local farming families thousands in Inheritance Tax claims, a legal expert has warned.
Pauline Davies, a wills and probate expert at Shropshire-based PCB Solicitors, has advised families to be conscious of the possible tax and legal implications, after a recent succession of cases where farming families have incorrectly registered the former occupation of the deceased, and subsequently been forced to pay Inheritance Tax, even in circumstances where significant tax reliefs should have been available.
Agricultural Property Relief enables farmers of agricultural land to qualify for 100% relief from Inheritance Tax, as long as the asset is defined as an agricultural property and has been occupied for agricultural purposes for at least a two year period prior to the property owner’s death. The legislation includes stringent terms which, if not followed correctly, often mean families are liable to pay the mandatory 40% Inheritance Tax on assets transferred upon death, including cases where the owner is mistakenly classified as ‘retired’.
Pauline Davies said: “In my experience, many farmers never actually retire, but continue to oversee the general operation, unless ill health prevents them carrying on their duties. Families need to be aware that if the property owner still played a significant role in the operation of the farm, they are therefore not retired, and this should be noted on the death certificate, to ensure they are fully entitled to the Agricultural Property Relief available.
“I’ve seen cases where, because other family members are also involved in the farm, they may only work 40 hours a week. While to many this is a normal working week, it would be considered ‘part-time’ in the farming industry, so many may see themselves as ‘semi-retired’. When the time does come to complete a death certificate, the family may reflect this-an understandable mistake to make, but one that can have enormous consequences.
“I’d advise any farmer looking to retire to consult with both their accountant and solicitor to plan and consider their options – whether this is succession planning by means of enlisting younger members of the family into the business, or selling the agricultural property. If anyone has any queries about Inheritance Tax or Capital Gains Tax on agricultural properties, I’d urge them to contact the team for more information.”
