Taxpayers will be pleased to hear that the Upper Tribunal has agreed with the earlier decision that, when determining whether a farmhouse qualifies for agricultural property relief from Inheritance Tax, the farmhouse and land to which it is of a ‘character appropriate’, requires common occupation but does not require common ownership.
Legislation defines agricultural property as including ‘cottages, farm buildings and farmhouses, together with the land occupied with them, as are of character appropriate to the property’.
In the Hanson case the taxpayer’s son occupied both the farmhouse and the land but he did not own the farmhouse or part of the land. The Tribunal decided that the farmhouse needed to be in the same occupation as the property to which it was of a character appropriate, but need not be in the same ownership.
Previously HMRC has argued that a farmhouse does not qualify for relief if it is not in the same ownership as the farmland. The ability to look at the whole farming unit, instead of who owns what, should make it easier to apply the test and in turn to obtain the relief.
For further information, contact Antonia Cooper on 01604 233233 or click here to email Antonia.