UK taxpayers with agricultural land or property occupied for the purpose of agriculture, or qualifying woodland within the European Economic Area (EEA), will be affected by the withdrawal of reliefs for inheritance tax (IHT) purposes from 6 April 2024 following an announcement in the 2023 Spring Budget.
Agricultural Property Relief (APR) and woodland relief were extended to property located within the EEA in 2009 to ensure compatibility with EU law. Following the UK’s departure from the EU however, these measures will be reversed so that previously qualifying property located in the EEA will be treated the same for IHT purposes as property located elsewhere in the world.
The measure also removes the availability of APR on property located in the Channel Islands and the Isle of Man – relief that has been in place since the 1970s.
Martyn Dobinson, Partner, and a member of the firm’s Land and Rural Practice Group says:
“APR is a relief from IHT that is available on the agricultural value of qualifying land and other property owned and occupied for the purposes of agriculture. This change will now place property owned within the EEA outside the scope of available relief. Similarly, woodland relief (a relief from IHT available on the transfer of woodlands on death), will also be withdrawn for property within the EEA. The changes will also apply to previously qualifying property held in the Channel Islands and the Isle of Man.
“The changes will take effect from 6 April 2024 and will impact on transfers of value and other IHT events from that date. It should also be noted that where there is a gift of previously qualifying agricultural property situated outside of the UK, from 6 April 2024, the gift will no longer qualify for capital gains tax (CGT) Holdover or Gift Relief. Going forward, the availability of the CGT relief for qualifying agricultural property will only be available for a gift of property situated in the UK.
“If you own property that will be affected and have concerns about how this measure will impact on your tax planning you should speak to your professional adviser in the first instance.”
For more information on this matter, please get in touch with Martyn Dobinson.