Farm diversification and inheritance tax
Numerous challenges faced by farmers in recent years have led to many farming families diversifying their business to bring in additional revenue and tap into other industries including tourism and leisure.
What many farmers don’t realise however, is that with diversification comes the possibility of increased inheritance tax liability.
Whereas normally, farm land which is being used for the purpose of farming is exempt from inheritance tax due to Agricultural Property Relief, a change of use may well see that relief being removed.
One way around this is for the farmer to investigate whether, should they lose APR, would they then qualify for Business Property Relief instead, for their new venture.
This effect on inheritance tax liability must always be considered by agricultural land owners, when considering diversifying their farming activity.