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Farming partnerships often start life as a sole trade with family members being introduced into the business over the years. Historically, the farmland itself is seldom shown on the business balance sheet and is held personally. Does this affect the entitlement of the owners to inheritance tax business property relief?
I act on behalf of a number of farming partnerships. The majority of these started as a husband and wife arrangement initially the husband owning the farm and his wife receiving a salary.
Such arrangements normally progressed into a partnership when the husband felt that it was highly unlikely that they would divorce. This was followed by the son or sons (but not normally any daughters) being admitted to the partnership.
At that time it was not uncommon to remove the farm from the business because I believe there was a legal case where a son left the partnership and claimed an interest in the land because it was reflected in the partnership accounts.
The problem I now have is that inheritance tax agricultural property relief on the land on the parent’s death will not be 100% but only 50%. To obtain the additional relief...
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