Happy New Year to you all and I hope that everyone had a lovely Christmas, although it probably seems a dim and distance memory now.
Two days before Christmas, the government announced that it was increasing the combined business property relief (BPR) and agricultural property relief (APR) allowance to £2.5 million. This allowance relieves from the charge to IHT assets that meeting the relevant conditions that apply to the relief’s.
Some will recall that in the Autumn budget the government announced that the 100% relief would be capped at £1m and this attracted widespread criticism, particularly from farming organisations, which argued that land values alone could easily exceed that threshold.
Since the Autumn Budget, the Government has already made changes to the initial announcements. One such change was enabling the allowance to be transferred between spouses and civil partners if the first to die did not use it. This was a welcomed change and bought the allowance in line with nil rate band and residential nil rate band that are also transferrable.
The increase to £2.5m is the most substantial revision so far and suggests a willingness to respond to concerns about unintended consequences.
However, it does make planning difficult if the goal posts are constantly being moved. People may have already put planning in place based on the rules as announced – what businesses, farmers and indeed any other person with an IHT liability needs is consistency and to know what rules they are working too. If they have an IHT liability they need to be able to plan for this with certainty knowing that the goal posts are not going to be moved at short notice which may throw their well thought out plans out the window.
Don’t get me wrong, this change is a positive one and goes some way to reducing potential IHT liabilities but is it enough…..only time will tell.
If you want to discuss your inheritance tax position with us, please give myself or my colleague, Will Teesdale, a call and we will be happy to help.