Trusts and Inheritance Tax

APR and BPR on foreign property

Produced by Tolley
  • 12 Jan 2022 14:11

The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • APR and BPR on foreign property
  • Agricultural Property Relief
  • How to claim a repayment of UK IHT
  • When APR applies
  • Potential difficulties in applying APR to property sited outside the UK
  • Tenanted Properties
  • Farmhouses
  • Business Property Relief
  • Rates of relief
  • Qualifying conditions for BPR

APR and BPR on foreign property

Agricultural Property Relief

The Finance Act 2009 amended IHTA 1984 in order to extend APR for UK inheritance tax to the European Economic Area (EEA). It had previously only applied in relation to agricultural property in the UK.

APR provides relief on UK inheritance tax payable on lifetime transfers or on death. The relief will be either 50% or 100% of the UK inheritance tax payable on the agricultural value of the property. In order for a property to qualify for relief at 100%, it is necessary for one of three conditions to be satisfied:

  1. that the transferor has the right to vacant possession on the transfer, or the right to obtain it within 24 months

  2. that the transferor has been beneficially entitled to the interest since before 10 March 1981 and satisfies the transitional provisions contained in IHTA 1984, s 116(3)

  3. that the property is let on a tenancy beginning on or after 1 September 1995

All other properties which qualify for APR will be subject to relief at 50%.

It should be noted that the agricultural value is not necessarily the market value and BPR, which could often apply to the same property as APR, may well provide a greater tax saving.

See the Agricultural value and development value guidance note and other notes in the APR Planning sub-topic.

APR was extended to the EEA following a press release by the European Commission stating that it did not consider the legislation to be compatible with the

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