As an estate duty practitioner (anyone else on here that ancient?) I had a look at the historic death tax treatment back to 1894. There were then 8 rates and an 8% top rate. Agricultural land was taxed on 25 x “annual value” i.e. notional rent. Later rates rose but no special treatment for farmers until 1925: a slightly different rate scale on “agricultural value” to that on excess market value.
Big change in FA 1949: a 45% discount on the full estate rate. Just before its abolition ED was charged on a slice basis, at 22 rates with a top rate of 85% but overall take limited to 80% of the whole estate. Gift survival period went from 3 to 5 to 7 years. A great death bed shelter as no minimum ownership period then!
CTT in FA 1975 was charged on a reduced value linked to 20 x rental value, but limited to £250k or 1k acres, plus new conditions of MO period and as to the person entitled: “working farmer”. In 1984 we got 50 % and 30% reliefs but not 100% and 50% until 10 March 1992. The value of an acre in 1975 is now 10 times or more, although after 1984 the restriction on acreage did go. So the really generous current treatment will have only lasted 34 years by 2026. The £325k NRB has not been revalorised since 2009. The £3000 annual exemption not since 1984. The RNRB and taper not since 2021.
Comrade Murray’s suggesting, farcically, the shrewd use of lifetime gifts is State-Sponsored Tax Avoidance. Should he be undermining the prospective yield, pitiful though it will be? This demonstrates the deficit of technical understanding and that gifts are not just about tax saving.
A minimum allowance of £1m of combined APR and BPR is far too low. It seems spouses will have one each. The official publications can only arrive in an example of a £3m tax free devolution to children by assuming, definitely not stated, that the first spouse to die will leave his or her £1m of qualifying property by will to the children direct or to an RPT or a s142 variation. Or by making a lifetime gift. And RNRB will taper and be lost altogether above a £2.7m total chargeable estate. The examples given come close to misinformation.
So getting to that £3m figure requires ideally some expert advice. While many of my clients were (invariably disappointed!) expert Practitioners of False Economy such advice will be another unnecessary cost burden on farmers who may have relied (I think sadly too much) on do nothing and the status quo.
It will be helpful if the £1m is transferable like the TNRB and TRNRB: that will avoid unnecessary equalisation of estates and gifts away from the surviving spouse on the first death. Transferability still brings problems familiar to us, such as divorced couples and brought forward allowance calculations.
Business asset CGT hold-over will assist IHT planning, ideally before 6 April 2026, and the use of companies, partnerships, and trusts to fragment ownership, plus early life assurance written in trust. In short, we are back to the type of IHT planning farmers did under estate duty in the 45% rate discount regime plus the new £1m. How safe in future is the CGT revalorisation on death?
There are many steps that could have been taken to dispossess Private Equity Moguls of the reliefs as a tax shelter e.g. a much longer MO and careful abolition of the landlord head of eligibility. My sympathy for farmers remains undiminished but they have been perhaps been too complacent as regards the future longevity of current rates of relief. As I used to say to my doctor clients "How would you like it if human anatomy changed completely every 3 years?” “Men learn little from others’ experience”: T S Eliot.
Jack Harper