Commentary

I12.602 Availability of business property and agricultural property reliefs

IHT, trusts and estates

I12.602 Availability of business property and agricultural property reliefs

I12.602 Availability of business property and agricultural property reliefs

It should be noted that both agricultural property and business property relief may be available in respect of agricultural property. Where both reliefs are available, agricultural property relief applies in priority1. The potential availability of business property relief should not, however, be overlooked. For instance, where the value of any land exceeds its agricultural value (as where agricultural land has some development or hope value) agricultural property relief will only apply to the agricultural value; however, business property relief may be available in suitable circumstances to relieve the hope value.

Where agricultural property is retained by an individual in the expectation of obtaining agricultural or business property relief the following potential traps should be borne in mind:

  1.  

    (a)     The possible loss of both reliefs on a lifetime transfer between spouses of farming assets and/or land. In the normal course of events the donor's qualifying period will be lost and the recipient spouse must hold the assets or land for the prescribed period before qualifying for the relief. Such a transfer can give rise to surprising results in connection with agricultural property relief. If a farmer transfers some of his farmland to his spouse the land will become eligible for agricultural property relief at 100% after seven years if she is not involved in the business and remains uninvolved (assuming the land otherwise qualifies for relief at 100% and is farmed throughout this period). If she becomes a partner in the business upon

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