Changing from AHA to FBT

[chipchap]

We’ve been in a similar situation but my dad had a retirement aha on one farm and an fbt that would take him to retirement on the other.
We managed to negotiate a mirrored a fbt to the aha clauses and made it s joint tenancy with my self and my dad. The new tenancy’s are exactly the same as the old ones but takes me to retirement. The new fbt that was the aha has the same rent calculation as a aha. It is doable but hold your nerve and don’t forget the main reason they want to do this is for tax purposes as a aha only creates a 50% inheritance tax relief where as a fbt is 100% at the moment. Happy to chat through things privately if you want @Stockwell

A succession AHA tenancy post 1995 also gives 100% APR.
I quote:
“Rates of Agricultural Relief
Agricultural Relief is due at 100% if:

• the person who owned the land farmed it themselves
• the land was used by someone else on a short-term grazing licence
• it was let on a tenancy that began on or after 1 September 1995

A property that was owned before 10 March 1981 can qualify for 100% relief if:

• it would have qualified under Schedule 8 Finance Act 1975 had it been transferred before that date
• the person who owned it had no possible right to vacant possession between that date and the date of the current transfer

Relief is due at a lower rate of 50% in any other case.”

 

[glasshouse]

We’ve been in a similar situation but my dad had a retirement aha on one farm and an fbt that would take him to retirement on the other.
We managed to negotiate a mirrored a fbt to the aha clauses and made it s joint tenancy with my self and my dad. The new tenancy’s are exactly the same as the old ones but takes me to retirement. The new fbt that was the aha has the same rent calculation as a aha. It is doable but hold your nerve and don’t forget the main reason they want to do this is for tax purposes as a aha only creates a 50% inheritance tax relief where as a fbt is 100% at the moment. Happy to chat through things privately if you want @Stockwell

A new aha will get 100% relief too
The excuse of the iht relief was used to con me out of a lot of improvements and money.
Always be highly suspicious of signing anything

 

[dinderleat]

A succession AHA tenancy post 1995 also gives 100% APR.
I quote:
“Rates of Agricultural Relief
Agricultural Relief is due at 100% if:

• the person who owned the land farmed it themselves
• the land was used by someone else on a short-term grazing licence
• it was let on a tenancy that began on or after 1 September 1995

A property that was owned before 10 March 1981 can qualify for 100% relief if:

• it would have qualified under Schedule 8 Finance Act 1975 had it been transferred before that date
• the person who owned it had no possible right to vacant possession between that date and the date of the current transfer

Relief is due at a lower rate of 50% in any other case.”

I read that as tenancy’s prior to 1995 can only claim 50% inheritance tax?

 

[Stockwell]

Thanks for all the advice everyone, very helpful indeed.
Lots of professional advice needed clearly.
Forgot to say the buildings in our current aha would be destined for residential conversions from what I can gather, with the aha land let presumably on the open market so there are clear huge advantages to the landlord both short and long term

 

[chipchap]

I read that as tenancy’s prior to 1995 can only claim 50% inheritance tax?

Yes, but succession tenancies granted after 1995 attract 100% relief.

 

[Flat 10]

Agents here have taken all the FBT land that various people had, and told one prefered tenant to take the lot or loose his FBT. You can see their point of view in only wanting to deal with one person, but some have lost significant acreage overnight.

I think this will come home to roost, if the 5000 acre man packs up how many people will be able to take the whole lot on? And if he goes bust the LL loses a lot but not much if 1 of 10 go bust.