Sibling inheritance tax ?

[Glomulinman]

We are two late middle aged farming brothers , no issues , when one of us dies the estate goes to the survivor ,the IHT will be considerable, any ideas on how to mitigate the tax bill ?

 

[Jerry]

Wives/spouses and children?

Is it just a pure farming estate or are there investment properties/diversifications?

 

[Nearly]

Give it to me?
If you're working farmers then there will be little iht between you.
Farmed agrictural land is IHT exempt.
Get some professional advice.
Mis-spend some of it while you're both alive?

The other investments might draw a bit of ih tax but it won't be your problem.

 

[Glomulinman]

Wives/spouses and children?

Is it just a pure farming estate or are there investment properties/diversifications?

Both single , farm.Property,investments.

 

[Huno]

We are two late middle aged farming brothers , no issues , when one of us dies the estate goes to the survivor ,the IHT will be considerable, any ideas on how to mitigate the tax bill ?

move the farm to the Cayman Islands or give it to your nominated successors tmrw?? you chose

 

[Jerry]

Both single , farm.Property,investments.

I think the best option given the situation is you need good professional advice from both a tax specialist/accountant and a solicitor.

Farming assets should be exempt currently but the property and investments will need care.

How is the business structured? Partnership? Is it equal between the two of you?

Who are you planning to leave the land and investments to? Are they active on the farm already?

What are both your goals? To minimise tax risk?

 

[Tamar]

You could always adopt me !! Problem sorted


So if you are both single, with no next of kin, why don't you just enjoy spending it. Better than letting the taxman squander it away once you have died.

 

[Spencer]

What’s plan after sibling 2 goes?

 

[Devil's advocate]

Of course they will care.

There must be someone.

But I'd start giving some to someone now. But everyone is free to do as they please.

 

[DrWazzock]

I’ve seen this time and time again not just in farming.
Work your arses off, build up a huge asset …. and die usually in quick succession as the survivor is 100 and can’t cope without the routine.
Then some second nephew you’ve never heard of gets it all.
Would the surviving sibling want to carry on alone at that age? Wouldn’t they just sell up and enjoy a rest at that age and damn the inheritance tax?
Nobody can take it with them and more often than not it’s the earning it rather than accumulating it that gives folk a buzz.
Anyway I thought you’d get entrepreneurs relief on all of it and ag land is IHT free anyway. So unless you’ve big non ag assets outside of farming I can’t see a problem.

 

[Spencer]

I’ve seen this time and time again not just in farming.
Work your arses off, build up a huge asset …. and die usually in quick succession as the survivor is 100 and can’t cope without the routine.
Then some second nephew you’ve never heard of gets it all.
Would the surviving sibling want to carry on alone at that age? Wouldn’t they just sell up and enjoy a rest at that age and damn the inheritance tax?
Nobody can take it with them and more often than not it’s the earning it rather than accumulating it that gives folk a buzz.
Anyway I thought you’d get entrepreneurs relief on all of it and ag land is IHT free anyway. So unless you’ve big non ag assets outside of farming I can’t see a problem.

Happened here locally although old boy put farm into a trust run by local land agents House is falling down, table still has pots on it from morning he passed, farm rented out on short term let’s with revenue going to agents for “running” estate. Good farm wasting.., growing good thistles though

 

[Grass And Grain]

We are two late middle aged farming brothers , no issues , when one of us dies the estate goes to the survivor ,the IHT will be considerable, any ideas on how to mitigate the tax bill ?

Balfour case. Is more than 50% of income, turnover and capital value in the farm/trading side of the business (as opposed to investment properties, e.g. office let's)? If so you should get inheritance tax relief on the whole lot (I think ).

Don't think there'll be any capital gains on trading business property on inheritance. Not sure about non-trading (investment) assets????

Might be worth investigating shifting property ownership to the partnership ?????

Just some ideas. I'm definitely not a tax advisor!!

 

[curlietailz]

Who will get it all when the survivor dies?
Why not start giving it to that person ? Bring them into the partnership to enable a bit of continuity

 

[soapsud]

We looked into partnerships. £2k legal & accountancy fees to set up. Ltd Co means less income tax payable, directors loans and many other perks but higher accountancy and tax return charges.

In your case, one option could involve you instructing the contract to include in the partnership agreement you two brothers plus one or more younger beneficiary. All parties have joint decisions on the farm. Even if the beneficiary(s) is not active. On the death of the second brother, the partnership states the farm will go to the beneficiary(s) with no IHT payable. So we heard.

Get advice

 

[Jerry]

Balfour case. Is more than 50% of income, turnover and capital value in the farm/trading side of the business (as opposed to investment properties, e.g. office let's)? If so you should get inheritance tax relief on the whole lot (I think ).

Don't think there'll be any capital gains on trading business property on inheritance. Not sure about non-trading (investment) assets????

Might be worth investigating shifting property ownership to the partnership ?????

Just some ideas. I'm definitely not a tax advisor!!

Balfour is a slightly odd case and probably not applicable in most situations. In their case the non farming income was property rentals but they were very clever to put many people into the properties that were intrinsically linked to the core farming business, not directly employed in most cases but needed none the less.

The judge viewed that the landlord was providing a service to help people stay and importantly work in the countryside, thus supported the farm business but a lot more besides.

It’s an interesting case but not applicable to most farm businesses due to scale.

 

[Grass And Grain]

Balfour is a slightly odd case and probably not applicable in most situations. In their case the non farming income was property rentals but they were very clever to put many people into the properties that were intrinsically linked to the core farming business, not directly employed in most cases but needed none the less.

The judge viewed that the landlord was providing a service to help people stay and importantly work in the countryside, thus supported the farm business but a lot more besides.

It’s an interesting case but not applicable to most farm businesses due to scale.

I see. Haven't read into detail of the case, and just took the much quoted 50% rule at face value.

Looks like I need to read the detail!!!

 

[renewablejohn]

Balfour is a slightly odd case and probably not applicable in most situations. In their case the non farming income was property rentals but they were very clever to put many people into the properties that were intrinsically linked to the core farming business, not directly employed in most cases but needed none the less.

The judge viewed that the landlord was providing a service to help people stay and importantly work in the countryside, thus supported the farm business but a lot more besides.

It’s an interesting case but not applicable to most farm businesses due to scale.

Rubbish, Balfour is very applicable to all diversified farmers and without it my wife would not have won her case against HMRC and scale really does not matter the holding in question was only just over 5 hectares. She was at the time teacher as well as farmer.