Farmers work beyond retirement to lower IHT

Farmers in Northern Ireland and throughout the UK are often working well beyond retirement age in order to avoid increased inheritance tax (IHT) liabilities that can be imposed in respect of the main house of residency on the farming land.

Inheritance tax does not apply to a farmer's residence as long as it used as a working farmhouse at the time the farmer dies. However, the estate is no longer entitled to claim agricultural property relief (APR) if the farmer has retired and is merely continuing residence in the farmhouse. While farmers traditionally pass the operation of the farm on to their children, the house is not always transferred to them as they often continue to live there until their death. The result is increased inheritance tax liabilities which can in some cases require the farming business to be sold.

Case law is by no means clear on the matter, in particular with regard to what level of farming activity is required to allow agricultural property relief to be applied - in one case an 81-year old farmer selling small quantities of eggs at the farm gate was allowed to claim APR on his farmhouse.

Elderly farmers planning their retirement should consider obtaining tax planning and inheritance tax advice. To speak to an inheritance tax specialist in Northern Ireland call Wilson Nesbitt in Belfast or Bangor at 0800 840 9288. Also, if you have not made a Will, and would like to receive a free Will writing information pack contact us by calling 0800 840 9293 or submit your details for a callback by clicking here.