Where There’s Muck, There’s Money

So-called lifestyle farmers – City traders and investors who use their wealth to pursue agriculture as a hobby – are increasing dramatically. As a result, the price of farmland has shot up at its fastest rate for 30 years, bucking the recession-hit markets of residential and commercial property. And whilst investing in farmland might not yield the greatest income returns, the benefits for the adventurist are plentiful: from game and clay-pigeon shooting to fishing and horse riding, there is ample scope for indulging in country pursuits alongside your sound investment.

But that’s not all!  A little-known rule exempting agricultural land from inheritance tax means that farms have become a very attractive investment. This may be the reason why so many non-farmers are involved in land transactions and why this trend is increasing. The recession has done nothing to reverse this trend, as investors are keener than ever to preserve their wealth and hand something to the next generation at a time when the government will be looking at increasing taxes wherever ever it can to service and reduce public debt. 

The relief from inheritance tax which comes with agricultural land – and commercial woodland in certain cases – is, however, a notoriously complex relief. It is a specialist area on which Andrew J. Kidd of Silverman Sherliker LLP has been advising clients for many years. 

Broadly speaking, actively farmed land potentially qualifies for 100 per cent relief from inheritance tax, which means it should fall out of your estate for tax purposes.  If you farm the land yourself, you qualify for 100 per cent of the relief after only two years. With skilled and expert planning, however, the same result is achievable if you contract out the farming element, or even let the land to a farmer in its entirety.  Farmhouses are a grey area, but Andrew Kidd has been involved in successfully appealing decisions made by HMRC on whether they qualify for the relief.

So all is not what it might seem down on the farm, as farmland opens up some very exciting and sound long-term investment potentials…        

For further advice, contact Andrew J Kidd on 020 7749 2700 or ajk@silvermansherliker.co.uk.