Planning and communication are key for equestrians navigating new inheritance tax rules, according to experts in the field. With changes to agricultural property relief (APR) and business property relief (BPR) now in effect, equestrians must carefully consider their legacy planning. The recent webinar, hosted by specialists from law firm Birketts and tax experts from accountancy firm Ellacotts, offered valuable insights into these new rules and their implications for the horse world.
A Complex Landscape
The horse world, as Daniel Martin from Ellacotts pointed out, does not fit neatly into a single category. However, relief from inheritance tax can still apply, albeit in specific ways. Understanding the available reliefs and how to qualify for them is crucial for equestrians.
Martin explained that inheritance tax is levied on the value of one's estate at the time of death, encompassing everything owned. Everyone has a nil rate band of £325,000, and anything above that is subject to a 40% tax rate, unless it qualifies for specific reliefs.
Equine-Specific Reliefs
Verity Gulliver, also from Ellacotts, highlighted the importance of APR and BPR for equine businesses. APR applies to agricultural land and buildings, while BPR covers qualifying business interests that meet certain conditions. Studs may qualify for APR, whereas livery yards are more likely to qualify for BPR, depending on their operations.
Gulliver emphasized the need for commercial operations with a profit-oriented view and systematic breeding with proper record-keeping. For liveries and other businesses, the extra services provided are crucial. Basic grass livery and DIY may not qualify, but services that go above and beyond have a strong chance of qualifying for BPR.
Communication and Record-Keeping
Communication and record-keeping are vital for successful tax and succession planning, as Emily O'Donnell, partner at Birketts, stressed. She encouraged equestrians to have clear records of ownership and ensure proper documentation for gifts, purchases, and arrangements. Tenancies and commercial leases should be clarified, and contracts should be in place for liveries.
O'Donnell also emphasized the importance of up-to-date documents that align with the current situation and future plans. She advised equestrians to review their wills and ensure written partnership agreements are in place. Clear communication with advisors and family members is essential to achieving clarity and certainty in the future.
A Holistic Approach
Abi Rudd, head of equine at Birketts, echoed the importance of communication and record-keeping. Rudd urged equestrians to have a comprehensive understanding of their assets and ensure proper documentation. By doing so, they can navigate the complex landscape of inheritance tax rules with confidence.
In conclusion, the webinar highlighted the need for equestrians to take a proactive approach to legacy planning. With the right communication, record-keeping, and understanding of available reliefs, they can ensure a smooth transition for their equine businesses and families. As the experts advised, staying informed and seeking professional guidance is key to navigating these new inheritance tax rules successfully.
