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Readers' Forum
Replies to Queries — 2
A losing option?
We act for a farmer who is in partnership with his son, the business being conducted on a freehold farm owned solely by our client. A nominal rent is charged by our client under a tenancy agreement.
Readers' Forum
Replies to Queries — 2
A losing option?
We act for a farmer who is in partnership with his son, the business being conducted on a freehold farm owned solely by our client. A nominal rent is charged by our client under a tenancy agreement.
If the business continues indefinitely, we understand that the freehold agricultural property will be free of IHT on the demise of our client. But our client recently entered into a two-year option agreement to sell the agricultural land to a developer. Also, there are substantial business loans charged on the agricultural land which are not connected with the partnership and relate to another business operated by our client's son, in which our client is not involved. If our client, who is 86 years of age, should die before the option is exercised, would the 100% IHT relief be lost? Also, would the charges on the agricultural property in respect of loans affect the IHT relief?
We quote verbatim from Taxation, 3 June 2004: 'Avoid mortgaging or charging an agricultural or business asset as this will reduce an asset eligible for IHT relief'.
Readers' views are welcomed.
(Query T16,509)
