The Chancellor, in her Budget, announced that Agricultural Property Relief (APR) and Business Property Relief (BPR) would be reduced.
Instead of the current 100% relief on assets qualifying for APR and BPR, in future, on death, an allowance totalling £1m will be available on all qualifying agricultural and business assets. The tax rate on assets over £1m will be 20% (ie a 50% relief).
To prevent forestalling, these new measures will apply for any lifetime transfers after 30th October 2024, if the donor dies on or after 6th April 2026. Therefore, any gifts from the date of the Budget will be caught by the new measures, unless the donor dies between now and 5th April 2026.
For trusts, the £1m allowance will be available and can be used at each 10 year charge. Any excess of agricultural or business assets in trust over the £1m allowance will benefit from the 50% relief, resulting in an effective maximum tax rate of 3% every 10 years.
The Treasury also announced that the £1m allowance will be divided amongst any multiple trusts set up after the Budget. Full details will follow in a consultation paper.
Clearly these measures will have a far reaching impact on the agricultural and business sectors. We recommend early consultation to discuss tax planning issues.
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