Agricultural land buyers ‘should seek professional advice’

Posted 30/12/2009

People thinking of investing in agricultural land in order to avoid inheritance tax (IHT) have been told to ensure they take professional advice before moving ahead with their plan.

Agricultural land may qualify for IHT relief on two grounds – agricultural property relief and business property relief.

It is thought this has helped to support demand for agricultural land in East Anglia and Robert Fairey, a Brown and Co land agent, recently named IHT relief as an important factor in the thinking of “buyers looking to acquire sizeable acreages”.

However, Julie Butler of chartered accountants Butler and Co warned that the system is not always straightforward.

Answering a question from a Horse & Hound reader about buying a stud farm, Ms Butler said the owner would have to be able to prove it operated on a commercial basis for it to qualify for IHT relief.

She also explained that some uses of farmland are not regarded as agricultural for tax purposes.

Ms Butler added that although there can be tax advantages associated with a stud farm business, “it would be worthwhile taking professional tax advice before moving the idea forward”.