The new Inheritance tax allowance, the residence nil rate band, is mainly being talked about in relation to couples passing their home on to their children.
If agricultural property relief applies to farm assets they can be completely free of inheritance tax, but it isn't easy to claim because conditions need to be met at the time the time the gift is made.
This interesting article highlights the way the new residence nil rate band can be used by farming families to minimise the inheritance tax bill and looks at the interaction between agricultural property relief and the new residence nil rate band.
With a bit of careful planning, farmers can make the most of agricultural tax reliefs, and combine them with the new RNRB to seek IHT relief on their whole estate, says Mr Moody. It can also help with those wanting to step back from active farming and rent their farm out. “This is powerful incentive to pass assets on well before death to keep your estate under £2m,” said Mr Moody. “You can make over relievable assets, using holdover relief to prevent capital gains tax bills, and use RNRB on either the non-agricultural portion of a house or a separate dwelling altogether.”