Landed estates and diversification
Produced in partnership with Julie Butler FCA of Butler & Co.
Landed estates and diversification

The following Private Client guidance note Produced in partnership with Julie Butler FCA of Butler & Co. provides comprehensive and up to date legal information covering:

  • Landed estates and diversification
  • Tax disadvantages of diversification
  • Diversification and farming losses
  • Types of diversification
  • Tax planning around the vineyard
  • Diversification and development land
  • Changing from Agricultural Holdings Act tenancies to farm business tenancies and farming ‘in hand’
  • The importance of trading
  • Renewable energy and Balfour
  • Glamping and holiday accommodation
  • more

With the current generic challenges by HMRC to inheritance tax (IHT) relief claims on landed estates and the Agriculture Bill, much care needs to be taken with regard to tax planning in relation to continued and increased diversification and the landed estate.

Tax planning for the landed estate is not a once-and-for-all-time exercise capable of being performed and forgotten. On the contrary, the taxation implications require attention whenever a landed estate is bought, sold, diversified, reduced and on all similar occasions. Diversification away from agriculture can mean using land in ways that may not qualify for IHT reliefs, particularly agricultural property relief (APR). For several decades, investors and lifestyle buyers of landed estates have sought ways to manage rural land and property to fall within the traditional capital tax reliefs afforded to farmers.

For many long-standing owners of landed estates, as well as for new buyers and investors, IHT and capital gains tax (CGT) planning remain key considerations, especially with increased diversification of activities. Farmhouses, especially the large manor house of the landed estate in particular, have been assaulted by HMRC’s attack on both taxes. One assault came through the strict application of the rules for APR as any diversification activities are excluded.

Tax disadvantages of diversification

The tax adviser must determine the tax rules applicable to any source of diversified income

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