As a farmer, you are likely aware of the importance of Agricultural Property Relief (APR) in managing inheritance tax liabilities. At Blackstone Solicitors, we understand that navigating the complexities of APR can be challenging. This article aims to clarify the “two year ownership” rule in APR, ensuring you are well-informed and can make the most of the relief available to you.
Please click here to find out more about our Private Client services
Free Initial Telephone Discussion
For a free initial discussion with a member of our New Enquiries Team, get in touch with us today. We are experienced in dealing with all the legal aspects of Trusts and Wills and once instructed, we will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help ensure you are on the best possible footing from the start and also avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or click here to make a free enquiry and a member of the team will get back to you.
Understanding Agricultural Property Relief (APR)
APR is a valuable inheritance tax relief that applies to agricultural property in the UK. It can provide up to 100% relief from inheritance tax on the agricultural value of qualifying property, which includes farmland, buildings, and farmhouses. The primary purpose of APR is to ensure that agricultural businesses can be passed down through generations without the burden of significant tax liabilities.
The “Two Year Ownership” Rule
One of the key requirements for APR is the “two year ownership” rule. This rule stipulates that the property must have been owned and occupied for agricultural purposes for at least two years before the date of the transfer. This rule is designed to ensure that APR is only available to genuine agricultural businesses that have been actively engaged in farming.
Qualifying for the “Two Year Ownership” Rule
To qualify for APR under the “two year ownership” rule, the following conditions must be met:
- Ownership
The property must have been owned by the transferor for at least two years before the date of the transfer. This means that the transferor must have legal ownership of the property for the entire two-year period. It is important to note that the ownership period cannot be aggregated with previous owners; the two-year period must be continuous and under the same ownership.
- Occupation
The property must have been occupied for agricultural purposes for at least two years before the date of the transfer. This means that the property must have been used for farming activities, such as growing crops or raising livestock, during the entire two-year period. The occupation must be continuous, and any breaks in agricultural use may disqualify the property from APR.
- Agricultural Use
The property must be used for agricultural purposes throughout the two-year period. This includes activities such as farming, horticulture, and the breeding and rearing of livestock. It is important to ensure that the primary use of the property remains agricultural and that any non-agricultural use is incidental.
Common Issues with the “Two Year Ownership” Rule
While the “two year ownership” rule is straightforward in principle, it can present challenges in practice. Here are some common issues that may arise:
- Recent Acquisitions
If you have recently acquired agricultural property, you may not meet the two-year ownership requirement. In such cases, it is important to plan ahead and ensure that the property is owned and occupied for the required period before considering any transfers. Our team at Blackstone Solicitors can assist you with planning and ensuring that you meet the ownership requirements.
- Breaks in Agricultural Use
Any breaks in agricultural use during the two-year period may disqualify the property from APR. It is essential to ensure that the property is continuously used for agricultural purposes and to avoid any non-agricultural use that could jeopardise the qualification for APR. If you anticipate any breaks in agricultural use, it is important to seek professional advice to mitigate any potential issues.
- Changes in Ownership
If there are changes in ownership during the two-year period, the property may not qualify for APR. It is important to ensure that the property remains under the same ownership for the entire two-year period. If you are considering transferring ownership, it is important to plan ahead and ensure that the ownership requirements are met.
Maximising APR with the “Two Year Ownership” Rule
To maximise APR with the “two year ownership” rule, it is crucial to ensure that the property meets all the qualifying criteria. Here are some steps you can take:
- Plan Ahead
If you are considering acquiring agricultural property, plan ahead to ensure that you meet the two-year ownership requirement. This may involve delaying any transfers until the property has been owned and occupied for the required period.
- Maintain Agricultural Use
Ensure that the property is continuously used for agricultural purposes throughout the two-year period. Avoid any non-agricultural use that could jeopardise the qualification for APR. If necessary, consider entering into agreements or arrangements to ensure continuous agricultural use.
- Keep Detailed Records
Maintain detailed records of the ownership and occupation of the property. This includes records of agricultural use, any non-agricultural use, and any changes to the property. These records will be essential in supporting your APR claim and demonstrating that the property meets the qualifying criteria.
- Seek Professional Advice
Navigating the complexities of APR and the “two year ownership” rule can be challenging, and seeking professional advice is crucial. Our team of experienced solicitors at Blackstone Solicitors can provide you with expert guidance on how to maximise APR and ensure that you meet the ownership requirements. We can assist you with planning, maintaining agricultural use, and keeping detailed records.
Conclusion
The “two year ownership” rule is a key requirement for APR and is designed to ensure that the relief is only available to genuine agricultural businesses. By understanding the criteria and taking steps to ensure that your property meets these conditions, you can maximise the relief available to you.
We have a proven track-record of advising upon all aspects of private client work. We will guide you through the process and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.to incorporate, what kind of ownership
How to Contact Our Private Client Solicitors
It is important for you to be well informed about the issues and possible implications of drafting a Will and setting up a Trust. However, expert legal support is crucial in terms of ensuring a positive outcome to your case.
To speak to our Private Client solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
Comments are closed.
