Christmas is now on our door step and the New Year is well on its way. This month I have taken the opportunity to reflect on the developments we have seen in the law over the last year and what we might expect in the years to come.
In January, we saw the Government lay down its 25 year environmental plan and with it the introduction of the Northern Forest Scheme and the potential for landowners and farmers to be incentivised to plant trees in order to meet the target of planting 11 million in the 25 year period. If such a plan is delivered, we will see a belt of trees across the north of the country by 2043.
The Residence Nil Rate Band (“RNRB”) which was introduced in 2017, has become firmly established this year and has certainly assisted those who may otherwise have been required to pay Inheritance Tax. The RNRB is an additional relief which can reduce the Inheritance Tax payable on your death providing you leave your home to a direct descendant, such as a child. The maximum RNRB available on an individual’s death is currently £125,000 and next April this will increase to £150,000.
Further good news in respect of Inheritance Tax came in the case of Vigne v HMRC. Here we saw the executors of the estate successfully claim Business Property Relief (“BPR”) on a livery. BPR is an Inheritance Tax relief available at a rate of up to 100% on a trading business. BPR is not available on investment businesses and therefore traditionally is not available on liveries although in the Upper Tribunal it was found this was possible on the Vigne fa
In 2018 we have seen a number of cases work their way through the Courts. These include disputes between unmarried couples about the ownership of the farm (Dobson v Grifey), claims on farming businesses where an individual does not believe they have received what they have been promised (Thompson v Thompson) and disputes between those farming in partnership (Wild v Wild). The common theme arising in each of these cases is the importance of a Partnership Agreement, succession planning and the need for clarity regarding the ownership of business assets.
In November, we saw the Office of Tax Simplification publish its first report on its review of Inheritance Tax commissioned by the Government earlier in the year. As I reported last month, we have also seen proposals from the Government to increase the fee for obtaining a Grant of Representation. It will be 2019 before I can tell you the outcome of these reports and proposals although all indications are that the fee will increase in April 2019. As we wait for the news to come, I will therefore sign out but not without taking this opportunity to wish you a very Merry Christmas and a Happy New Year.
At Hay & Kilner, our specialist advisers in our Rural Team have extensive experience in advising land and farm business owners about the complexities of Inheritance Tax, APR and BPR to ensure all reliefs and exemptions available on death are captured as much as possible.
For more information on any of the above, or how we can help your business, please contact Alison Hall, or call 0191 232 8345.