Many farmers could face much steeper inheritance tax bills after the latest ruling in the long-running 'Antrobus' case. Land Tribunal judges decided in a test case that farmers’ inheritance tax relief will only cover the agricultural value of a farmhouse and not its market value, which is usually far higher, meaning 40 per cent tax is levied on the difference.
The Revenue argues that farmhouses should not automatically be 100% exempt from inheritance tax under agricultural property relief rules.
The legal team that has been battling against the Inland Revenue in the case of a 51ha farm, belonging to the late Rosemary Antrobus, says a farmhouse should qualify for 100% relief.
Round one of the long-running litigation went to the taxpayer, but the Revenue decided to pursue it further.
The Lands Tribunal has just ruled that only 70% of the house's value should be considered as agricultural and inheritance tax must be paid on the 30% balance.
Jim Quinn, the conducting solicitor and senior partner with mfg solicitors said: "There have been more and more cases where the IR has said it wants tax on a proportion of the value of farmhouses - post Antrobus it will be asking for it in every case".
Valuer Charles Haselwood of Fisher German’s Banbury Office says: "If you own a farmhouse you have a problem and you need to plan your way out of that problem. There are methods of reducing the potential tax burden, but these need to be considered well in advance".
