Changes to inheritance tax could spell good news for farmers in future. New rules, which are due to take effect in April 2017, will see changes to the nil band inheritance tax rate.
The new rules, which apply to farm houses being left to lineal descendants, could open up more opportunities for new entrants into the agriculture sector via Farm Business Tenancies (FBTs).
With effect from April 2017 an inheritance tax Main Residence Nil Rate Band (MRNRB) will be introduced to allow residential property that has been an individual’s home to be passed free of IHT to direct descendants.
The new levels will bring more properties within the nil IHT band and offer married couples with lineal descendants a more direct and less problematic relief, rather than needing to show that the dwelling house is a farmhouse.
The changes could mean that it will soon be easier for farmers to keep the properties while the land is leased to those wanting to earn their living through an FBT.
However, careful financial planning is still essential to ensure that these latest IHT changes, together with other taxation changes, are fully mitigated. Before making a decision to retire or to exit your ARA business, it is important to seek expert financial advice.