A government review looking into the inheritance tax system has been warned against making major changes, and instead opt for small changes to make it Brexit ready.
The review is to look at the ease or complexity of legislative rules around inheritance tax with the aim of recommending improvements.
Set up by Chancellor Philip Hammond and conducted by the Office of Tax Simplification (OTS), the review is seen as important to farmers as uncertainty mounts in the agricultural industry.
Rural organisation the Country Land and Business Association (CLA) has set out how small changes to the administration and interpretation of inheritance tax rules can help to ensure farming businesses are ready to cope with the inevitable changes that Brexit will bring.
It has set out a number of improvements that can be made to the system, most notably providing more time and support for families to put their Estates in order following a death, and suggested important clarifications to the rules to ensure key diversifications of farming businesses, such as holiday lettings, qualify for vital inheritance tax relief.
The CLA is also calling for the Government to make clear that land on which environmental or other public goods activities are taking place, is explicitly included within the scope of agricultural property relief.
'Accelerate growth'
CLA President, Tim Breitmeyer said the the OTS can help by recommending "clarity, flexibility and better administration" of the inheritance tax regime to the Chancellor.
“Brexit will bring significant and fundamental change for many land based businesses across the countryside. In order to respond, many will need to invest to increase profitability, productivity and accelerate growth,” Mr Breitmeyer said.
“This includes more farm businesses seeking new income streams from activities like tourism that sit alongside their core farming business. It is important that those who do this are not penalised by current inheritance tax rules.
“Also, as government policy clearly identifies a switch to encouraging more public good activities on rural land as a core policy objective, it must ensure that landowners who respond do not get penalised by the inheritance tax system. For example, land dedicated to environmental schemes must benefit from the same reliefs as agricultural land.
Mr Breitmeyer added: “Faced with the uncertainties and opportunities of Brexit, it is for each rural business to take its destiny in its own hands. What the Government can do is ensure that the tax regime is fit for purpose and helps businesses to have the confidence to invest and grow.”
