Inheritance tax issues for the Barratt family
Owning land and multiple properties can have its own drawbacks, as we’re now seeing with potential inheritance tax charged on the estate of the deceased housebuilding magnate, Sir Lawrie Barratt.
Sir Barratt died last December, sometime after an horrific burglary had taken place at his home. Unfortunately, because he did not leave his entire estate to his second wife, Lady Sheila, the inheritance tax bill fell due immediately, rather than on her death.
The family was said to own 45 properties in their Farndale estate in Yorkshire, property in Northumberland and a villa in the south of France. In total, it was estimated that Sir Barratt left an estate valued at over £43 million to his beneficiaries.
The actual amount of the resulting inheritance tax bill has not been released, but it will of course be substantial and the family have been forced to discuss their options, which include putting a number of properties on the Farndale estate up for sale, notifying the families currently occupying them, that they must leave.
This move has obviously caused significant upset and uproar, particularly as the family’s land agent says there are no other properties available, to offer to the affected tenants.
Although IHT can be paid over 10 years, 10% of the bill must be paid immediately and unfortunately, any properties solely owned by the deceased cannot be sold until the IHT is paid.
This may mean that in order to pay the amount due, bridging loans may be sought, with extremely high interest rates. If this is the case, the family would be well advised therefore, that they need to be in a position to sell the properties immediately after probate has been granted, so that they can pay off the bridging loans.