Double reduction

A farm is owned by one of the partners of a farming partnership and this property has been put up for security in relation to a loan to the partnership.

Is the value of the farm still reduced for inheritance tax agricultural property relief purposes under IHTA 1984 s 162 being an encumbrance on the property even though the loan is not solely in the name of the landowner?

Furthermore is the partnership loan also deducted in arriving at the net value
of the partnership interest for business property relief purposes under IHTA 1984 s 110? This would make a difference if the partnership had any excepted assets.

We would welcome readers’ opinions as to whether the loan can really be ‘deducted’ twice.

Query 17 610 – Red

Reply from Pinstripe Farmer