The long-awaited Inheritance Tax Review includes "encouraging words" for farming families, according to NFU Mutual.
The Inheritance Tax Review, published by the Office for Tax Simplification (OTS), included analysis of some of the tax reliefs used by farming families.
More than 3,500 people shared their views about Inheritance Tax with the OTS.
Many of those who responded told the OTS that, at what is such a difficult time, they felt they were being asked to fill in complicated forms even where the relative who had died had only left a small amount.
The review was commissioned by Chancellor Philip Hammond earlier this year, and includes some "very welcome news" for farmers, the rural insurer says.
Sean McCann, chartered financial planner at NFU Mutual, said: “Although it acknowledges that inheritance tax is fiendishly complex, the generous reliefs used by farming families are singled out as being simple and straightforward.
“Agricultural Property Relief (APR) and Business Property Relief (BPR) help farms to be passed down through generations by reducing, and in some cases, eliminating hefty tax bills when someone dies, encouraging farmers and agricultural business owners invest for the long term.”
Mr McCann added: “It was good to see a spotlight shone on the taxation of furnished holiday lettings, which are commonly used by farmers to diversify the farm business.
“In general, these lettings are treated as a trade for income tax and capital gains tax but aren’t normally eligible for Business Property Relief, meaning they are subject to inheritance tax. It’s an anomaly that continues to catch out farming families,” he said.
'Stress and anxiety'
A main feature of the review was the complexity of inheritance tax and the stress and anxiety that can cause for many people who try to navigate the system.
The report also acknowledged the increased admin that is required for anyone claiming APR or BPR.
Mr McCann said: “At eighty pages for part one, the sheer size of this report shows the scale of the problem. Simplification of inheritance tax is long overdue.”
The second half of this report is due in spring 2019 and it’s likely recommendations will call for fundamental changes to inheritance tax.
The latest tax receipts show the taxman is on course to take a record £5.5bn in inheritance tax from families this tax year with £3.3bn taken between April and October.
