The answer may simply be that we have to wait until we see some draft legislation, but my colleagues and I have been having a discussion regarding the “50% relief” that will be available on APR/BPR assets over and above the new limit of £1m.
The initial release on budget day indicated that 50% relief would be given on the same basis as it is now for certain assets (e.g. personally owned assets used by a company that the property owner controls).
However a subsequent release indicated a 20% IHT rate would apply, and gave an example of a farm with a value of £3m being passed down to the next generation by a married couple. Under the 50% relief mechanism that we currently have, and assuming conducive structuring of asset ownership and Wills, this could I think have been £4m (assuming £1m of full relief on the first death, and 50% on the balance leaving £500k to be covered by the NRB/RNRB).
The fact that £3m has been used as the example (where the Government are trying to sell how ‘generous’ APR/BPR will continue to be) would perhaps suggest that a new 20% rate will be introduced (rather than it simply being a shorthand rate).
I would be interested to know whether anybody has considered this point and had a view.
I’ve seen what I believe to be the same example you’re talking about, but my interpretation of it was that the reference to 20% was simply a reflection of the fact that 50% of 40% is 20%.
The example of £3m I have seen included £1m on first death, £1m on second death and potentially £1m nil rate bands. I think this is misleading as it assumes the £1m on first death is gifted to AN Other on death, rather than using the spouse exemption, and that the RNRB is available. Doesn’t seem to worry about anything else the deceased owns either.
As you say, we need to wait for draft legislation. We saw with the RNRB there could be caveats meaning qualification for the reduced rate (20%) is dependent on linear descendants only will benefit. Not all farmers are 1. Married 2. Have children.
I did see a Professor of political economy state that a farm would also qualify for both APR and BPR resulting in a potential £5m IHT exemption, it’s yet to be seen however.
He was very authoritative and convincing but it wasn’t explained where he got the detail, I can’t find it, and not all farms are Ltd Companies. With “experts” muddying the waters like this misinforms the public leading to even more confusion. We will have to wait before giving advice.