ExpertMedium2 marksMultiple Choice
ACCA · Question 21 · Inheritance tax
Section B: Case 2 - Arthur Pendelton's Estate
Scenario: Arthur Pendelton died on 15 February 2024. He owned a working farm, 'Oakwood Farm', which he had actively farmed himself for the last 15 years. The farm consists of agricultural land, a farmhouse where Arthur lived, and two farm cottages occupied rent-free by his farm workers.
Question: Which of the assets comprising Oakwood Farm will qualify for Agricultural Property Relief (APR) at 100%?
Section B: Case 2 - Arthur Pendelton's Estate
Scenario: Arthur Pendelton died on 15 February 2024. He owned a working farm, 'Oakwood Farm', which he had actively farmed himself for the last 15 years. The farm consists of agricultural land, a farmhouse where Arthur lived, and two farm cottages occupied rent-free by his farm workers.
Question: Which of the assets comprising Oakwood Farm will qualify for Agricultural Property Relief (APR) at 100%?
Answer options:
A.
The agricultural land only.
B.
The agricultural land and the farmhouse only.
C.
The agricultural land, the farmhouse, and the farm cottages.
D.
None of the assets, as APR only applies to tenanted farms.
How to approach this question
Evaluate each asset against the APR criteria. Agricultural land qualifies. A farmhouse qualifies if it is of a character appropriate to the property. Farm cottages qualify if occupied by farm workers. Since Arthur farmed it himself for >2 years, the rate is 100%.
Full Answer
C.The agricultural land, the farmhouse, and the farm cottages.✓ Correct
Agricultural Property Relief (APR) is available on the agricultural value of agricultural property. This includes agricultural land, farmhouses (if of a character appropriate to the property), and farm cottages (if occupied by farm workers). Because Arthur owned and occupied the farm for agricultural purposes for at least two years prior to his death, all these assets qualify for APR at 100%.
Common mistakes
Excluding the farmhouse or cottages, thinking only the bare land qualifies.
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