ExpertACCA · Question 22 · Inheritance tax
Section B - Case 2: Bramble Farms
Arthur owns Bramble Farms, a working agricultural estate. He decides to gift the entire estate to his daughter, Beatrice, during his lifetime. The estate includes agricultural land, a farmhouse occupied by Arthur, and various farm machinery.
The agricultural land has an agricultural value of £800,000 and a market value (due to development potential) of £1,200,000. Assuming Arthur has owned and farmed the land for 10 years, how is relief applied to the £1,200,000 value for IHT?
Section B - Case 2: Bramble Farms
Arthur owns Bramble Farms, a working agricultural estate. He decides to gift the entire estate to his daughter, Beatrice, during his lifetime. The estate includes agricultural land, a farmhouse occupied by Arthur, and various farm machinery.
The agricultural land has an agricultural value of £800,000 and a market value (due to development potential) of £1,200,000. Assuming Arthur has owned and farmed the land for 10 years, how is relief applied to the £1,200,000 value for IHT?
Answer options:
APR applies to the full £1,200,000.
APR applies to £800,000, and the remaining £400,000 is fully chargeable.
APR applies to £800,000, and Business Property Relief (BPR) applies to the remaining £400,000.
BPR applies to the full £1,200,000, superseding APR.
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