Inheritance Tax help needed!!!

[Henrieta]

The valuation date is the important date in this instance. Therefore if your brother is considered a farmer at this date there is the opportunity for "tax planning". This would involve transferring his non agricultural assets to his wife in advance of the valuation date. These transfers to a spouse are exempt from all taxes. If he goes ahead and does that he should be careful not to put an arrangement in place for the return of the non agricultural assets from his wife as this may be regarded as "tax avoidance" and a clawback of CAT could be triggered via S811 TCA 97.

The important thing would be for him to transfer the non agricultural assets to his wife unconditionally and at some point down the line put them back in joint names.

 

[DrPhilG]

It's not sure whether he would qualify as a farmer at this point, that all depends on the valuations on his 2 houses. Obviously if he transferred the investment property into his wife's name now, it would greatly reduce his "non agricultural" assets, but he didn't think that this would be legal because it would be tax avoidance.

 

[Henrieta]

I would regard it as tax planning but in fairness if he is uncomfortable about it, it is his decision to make. He should maybe consider speaking to a solicitor/tax consultant who specialises in inheritance issues?

 

[Bar101]

You might want to take another look at the use of "favourite nephew" status (as mentioned by mathepac at the start of this thread). Given you have been in the UK it would be a stretch to use it for you but it could easily be applicable to your Brother. It would essentially give your Brother the same inheritance thresholds as a son which are much much higher than that of nephew. Take a look at Section 10 and 11 in [broken link removed] . Then consult your adviser.

 

[DrPhilG]

You might want to take another look at the use of "favourite nephew" status (as mentioned by mathepac at the start of this thread). Given you have been in the UK it would be a stretch to use it for you but it could easily be applicable to your Brother. It would essentially give your Brother the same inheritance thresholds as a son which are much much higher than that of nephew. Take a look at Section 10 and 11 in [broken link removed] . Then consult your adviser.

For the favourite nephew thing, do you not need to be able to show that you worked a considerable amount on the farm? My brother did not, so I think this would be a lost cause.

 

[Bar101]

With a small business - which this is - "considerable" is defined as only about 15 hours per week. This would not preclude your Brother having another full-time job (many small farmers do) or running his own farm as well. It might also include time spent on paperwork, form filling etc. Additional evidence would include use of the land by your Brother to store his own cattle/sheep etc. However this is definitely a case where it is worth consulting an expert. It will be money well spent.

 

[DrPhilG]

With a small business - which this is - "considerable" is defined as only about 15 hours per week. This would not preclude your Brother having another full-time job (many small farmers do) or running his own farm as well. It might also include time spent on paperwork, form filling etc. Additional evidence would include use of the land by your Brother to store his own cattle/sheep etc. However this is definitely a case where it is worth consulting an expert. It will be money well spent.

Yeah, but my brother is not a farmer, and did not help my uncle with the farm in any way. He did all his own paper work etc and my brother did not have any dealings in any way with the farm.