Agricultural frequently asked questions

• Will my farmhouse qualify for relief from inheritance tax?

  This depends on the circumstances of your particular farm; the size of the farmhouse compared to the size of the farm and whether it is ‘character appropriate’ e.g. is the farmhouse a working farmhouse, or is it a large townhouse which happens to be on a farm.

• What happens if I don’t have a will?

  If you don’t have a will, your estate will be distributed in accordance with the intestacy rules, which set out in strict terms who in your family should benefit. This may mean that it doesn’t go to the people you want it to, or, potentially worse, it goes to people you don’t want it to. Where you are farming in a partnership but don’t have a written agreement, this can also cause issues when deciding what should form part of the farming partnership and what should fall under the intestacy rules. This uncertainty usually causes family arguments which are often avoidable by having an up-to-date will in place.

• Will the farm have to be sold in a divorce?

  It’s rare for the court to order a sale of the entire farm. The court will consider if part can be sold off without affecting the viability of the farming business to meet the other party’s needs. The court does however have power to make an order for the farm to be sold.

• Why do I need a written partnership agreement?

  Without a good partnership agreement, you’re opening yourselves up to real problems and cost when there is a disagreement in the future. Even if there are no disagreements, by structuring the partnership in the right way you will also be able to maximise relief from inheritance tax. We recommend that you sit down with an expert and decide what should be part of the partnership assets, how profit should be allocated each year and what should happen when a partner dies or decides to leave.

• I own 70 acres of land which I rent out. Because I do not farm it myself, is the land subject to inheritance tax when I die and if so, is there anything I can do about it?

  If the land is part of a working farm, it is likely to qualify for Agricultural Property Relief, either in part or in full, which could save inheritance tax even where you are renting it out. The qualification for Agricultural Property Relief is that you must have owned it for at least seven years before you die. If you have been renting it out since before September 1st 1995 it may only qualify for 50% relief. Inheritance tax is a complicated area so it is always advisable to seek legal advice.