Changes to APR and BPR

Mark Morton takes a look at the current position on changes to APR and BPR. 

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Transcript

Hello everybody. It's Mark Morton here. Welcome to this Mercia podcast. And just considering where we are in the run up to the spring forecast with the IHT changes that were proposed by the government and in particular this time the changes to agricultural proctor relief, which of course has had a lot of publicity in the general press, but also the same principle being suggested for business property relief, which for those affected. 

Is very similar issue significant amounts of money for some people, and yet in the general press just does not get the same coverage as it does now. Maybe that's because there aren't a million business owners in Mercedes blockading London in the same way as there are, you know, lots of farmers with tractors. 

So maybe it doesn't attract the headlines. Maybe there isn't the. Public sympathy or organisation. You know, there is a union for farmers and there is not a union for owner managed business owners. So, it's interesting how, you know, some things get picked up. It's interesting, again, in terms of the presses understanding or lack of understanding. 

And I think having traveled round the country since the budget talking to. A lot of you, a lot of your clients. I think what strikes me with agricultural property relief is there is a big difference between a working farm and a hobby farmer. And there's a big difference between a working farm and a landed estate. 

And I, I think when you travel round and talk about, you know, viability of farms and what's the minimum acreage you need in this area of the country for a farm to be viable. Times the land value. There are clearly variations in that land value. If you're in Northumberland or Shrewsbury or down on the South Coast or whatever, there's clearly some fluctuation. 

I think the general feeling that I've come away with over the last few months is that a million quid is just not enough to cover the value of land for an average working farm, if you call it that, and of. Has anybody really thought through the consequences of this? Because what re essence saying is, you know that you trigger an IHT liability, as we all know, you are asset rich, cash poor. 

How do you think you're proposing to pay for that now? If you follow the logic, what you'll be seeing is the only way to pay for it if you're not careful is to sell some of your farm land, which means over the next two generations you don't have enough acreage ultimately for to be a viable farm. Leaving aside the physical cost of that of course, and what the government does with that money. 

So it seems a very limited. Sort of policy issue. It seems very short term. We think we can get a bit of money upfront and you're not interested in what happens two generations down the line. That frankly is nonsensical when we're talking about food and food production and food security. A lot of pressure on the government, as we all know, would not surprise me if there is a change. 

I think some of the it's clear that a lot of the government ministers who know nothing about tax who have to comment on it have been sold a little brief, and you will hear the figure of 3 million quid floating around. You know, you don't pay any IHT until you've got 3 million quid. Of course what they're talking about there appears to be. 

325 grand each for a married couple civil partnership, another 1, 7 5 for the home. If you're not tapered, of course which is a question in its own right. So we're not a default position. And then a million pounds of a PR each. But of course if you are husband stroke, wife, stroke, civil partner, your 1 million would not be crystallised by a transfer to your spouse at death. 

So it's a bit disingenuous to say as a couple, you've got 3 million quid. You'd have to do something very specific to be able to crystallise that 3 million quid. And then of course, these are other strange comments that you only pay 20% tax on the value above that. You don't pay it, your estate pays it. 

You come back to the same point, how are they gonna pay it? And it's not a 20% rate. What it is, of course, is 50% relief on the value of your agricultural property over and above that. But the rate is, and so you see this misreporting. Miscommunication by both reporters and politicians who clearly don't really know what they're talking about. 

Let's go onto business property relief. The same point. You know, it may be you are leaving shares in a limited company to somebody. It's the estate that has to pay the tax, not generally the beneficiary. So although these changes are two years away you know, you could take the view. No, I do apologise. 

18 months away now, less than that, so 20, 26. But if you are looking at, I suppose planning things may change, I think the government may be forced to change, wouldn't they understand the consequences of what they're doing. So we will see what whether any further comment is passed in the spring statement or whether it's just kicked to towards the next budget, which one would assume with Buddy Autumn of next year, but. 

After the last three or four months, leaving a budget till October, November of 2025 seems a, you know, that seems an eon away at the moment in light of how how things have transpired. I wouldn't necessarily swap the position of the chancellor, but having said that, I wouldn't have made some of these decisions of the Chancellor. 

So it is a little bit, you know, you reap what you sow here. Anyway, on that happy note. If you've not yet ordered our spring forecast summary, all of this sort of stuff will be covered in there, any potential changes. And of course, tax cards. Don't forget to order those tax cards, which are a great promotional tool to physically give to clients once a year. 

Okay, take care everybody.