inheritance tax and farming, anyone an expert?

V

village idiot

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hi,
i have acouple of specific questions on the inheritance tax laws surrounding farming reliefs, anyone out there got the expertise?
if so, could you PM so we could chat?

regards,
duffsaw
 
will do so, apologies!!
does anyone know the 'requirments' to fulfil to be recognised as a farmer with reference to the inheritance tax laws?
we are farming, but is it to enough of a level, thats the question?

thanks
 
If you mean agricultural relief, then it is an asset based test.

If more than 80% of what you own and what you are inheriting ( or being gifted) is agricultural, then you qualify as a farmer. If you qualify you are entitled to the relief which reduced the value of the gift or inheritance by 90% for tax purposes.

There are quite a few terms and conditions, and you should consult an accountant, solicitor or tax advisor with the relevant expertise BEFORE the gift/before the estate is dealt with as there are sometimes ways to make yourself qualify which are legitimate.
 
Also worth adding that you don't need to satisfy the 80% test if the benefit is woodland i.e. you automatically get the 90% reduction for forestry irrespective of whether you qualify as a farmer or not. [Link to source]
 
Having read the link to the revenues website I am still a little unclear so can I add a further query in relation to this. Say a farm of land worth c. 1 million euro is being inherited by a son, who has net assets of 300 k. How much CGT is applicable ? From a taxation stance is there any benefit to inheriting before or after his parents death ? He is a PAYE worker.
 
In this situation the agri assets represent 76.92% of assets therefore not meeting the 80% test. This discussion is about capital acquisitions tax CAT not CGT.

There is stamp duty on transfers during lifetime but it allows for specific tax planning as the circumstances of the doner and donee are known. Leaving it for death may avoid stamp duty but circumstances may change such as the assets a donee has at date of death or level of relief available.
 
Thanks for reply. The figures I were using were rough. The donees would be currently retired living on a small amount of rental income from the farm. I d say the farm is probably worth more than 1 million, possibly 1.5, assuming he fits the 80% bracket to qualify as a farmer, how much tax would be payable ?
 
You need to get specific advise to make sure that everything is in order. An independent valuation is required.

CGT you need to make sure that the donee qualifies for retirement relief there is a provision that land transferred to a child after a period of letting will qualify but you need to make sure.

CAT if the agri relief applies the the value is reduced by 90% the 1m is reduced to 100,000 and then if this is under the parent to child threshold of 225k then there is no CAT payable.

Get professional advise.
 
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