AGRICULTURAL ACCOUNTING NEEDS A KNOWLEDGEABLE TEAM

Jun 23, 2017

The postponement of the Making Tax Digital provisions at the end of April prompted both a lot of jubilation and head-scratching in equal measure.  So it is with some relief that we don’t yet have to insist that our agricultural and rural community clients stride forth to tackle this HMRC directive.  But there are one or two other changes that we should be aware of. Not least the new Residence Nil Rate Band (RNRB) – and agricultural accounting specialists Afford Bond Cheshire can guide you through this.

 

So what is the Residence Nil Rate Band?

Over the past 12 months, some commentators have observed that more farming and agricultural communities than ever have been caught by soaring house prices – often placing them at higher Inheritance Tax risk.  But from April 2017, the new RNRB could help reduce the burden of IHT for most farming families by making it easier to pass on the family home to those closely related. This is where the help of agricultural accounting specialists Afford Bond, comes in.

 

As most of us know, IHT is charged at 40% on the value of an estate above the basic nil rate band (NRB) of £325,000 after taking into account the value of any tax relief, exemptions and chargeable lifetime transfers.  We expect this to continue until the 2020/21 tax year. 

 

However, from April 2017, there is also an additional RNRB which enables the family home to be further protected provided it is left to direct descendants of the original farm or other agricultural property owners.  So while the farmhouse may qualify for Agricultural Property Relief (APR), if it remains connected to the actual farming business, for landowners who rent the farm-land out, the RNRB could provide them with even further protection from IHT. 

 

What are the nil rate band (RNRB) amounts?

The maximum available amount of the RNRB (excluding any transferred amounts) for death in the following tax years are:

• £100,000 in 2017 to 2018

• £125,000 in 2018 to 2019

• £150,000 in 2019 to 2020

• £175,000 in 2020 to 2021

 

Succession planning and wealth planning remains as important today as it ever has and with the value of property ever increasing – and the risk of IHT relief being withdrawn by future Governments – means that our rural community should consider taking advantage of opportunities which are available today – rather than hoping things might get even better in the future.  Contact Lindsay Beeston at agricultural accounting and wealth planning specialists Afford Bond in Nantwich, Wilmslow and Chester for further details.

 

 

Other posts you might like:

Spring Statement 2022

The Chancellor Rishi Sunak presented his Spring Budget on 23 March 2022. In his speech he announced a cut in fuel duty for petrol and diesel as he sought to ease the impact of rising prices for households and businesses.

read more