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bigduckontax
bigduckontax, Accountant
Category: Tax
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If I leave the farm to my second son and then he leaves it

Customer Question

If I leave the farm to my second son and then he leaves it to his nephew, the son of my of eldest deceased son is there any liability for CGT or IHT? Since it is passing to the next generation I presume there are no tax liabilities? Am I correct?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.

Hello, I'm Keith and happy to help you with your question.

Firstly there is no CGT on death, all the deceased assets being aggregated and subject to IHT. Anything over 325K is taxed at a flat rate 40% unless more than 10% of bequests are of a charitable nature when the rate falls to 36%.

However, in general terms agricultural land passes outside the IHT envelope. You can read all about the terms and conditions here:

https://www.gov.uk/agricultural-relief-on-inheritance-tax

but I think you will find the preamble covers the matter; here is the relevant extract:

'You can pass on some agricultural property free of Inheritance Tax, either during your lifetime or as part of your will

Agricultural property that qualifies for Agricultural Relief is land or pasture that is used to grow crops or to rear animals intensively.

It also includes:

  • growing crops
  • stud farms for breeding and rearing horses and grazing
  • trees that are planted and harvested at least every 10 years (short-rotation coppice)
  • land not currently being farmed under the Habitat Scheme
  • land not currently being farmed under a crop rotation scheme
  • the value of milk quota associated with the land
  • some agricultural shares and securities
  • farm buildings, farm cottages and farmhouses'

I do hope I have been able to set your mind at rest on this matter.

bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.
Thank you for your support.