Families with a 1,000-acre farm face a £1.8million inheritance tax bill after Labour’s Budget, accountants warn.
Even though this can be paid over ten years, it could still leave estates having to find nearly £40,000 a year on top of likely £144,000 annual profits.
The figures from accountancy firm Evelyn Partners suggest that farming families will face the difficult decision of having to sell off land to pay the tax.
Chancellor Rachel Reeves announced changes to inheritance tax that will mean farms worth more than £1million will be liable for the charge of 20 per cent.
Luke Lodge, Financial Planning Partner at Evelyn Partners, said: ‘£3million could potentially be passed down tax free with effective planning.
Chancellor Rachel Reeves (pictured) announced changes to inheritance tax that will mean farms worth more than £1million will be liable for the charge of 20 per cent
Families with a 1,000-acre farm face a £1.8million inheritance tax bill after Labour’s Budget (stock photo)
The figures from accountancy firm Evelyn Partners suggest that farming families will face the difficult decision of having to sell off land to pay the tax (stock photo)
‘But it’s feasible only for currently married farmers with under 200-250 acres.
‘The numbers change massively for larger farms and/or where the farmer is single, divorced or already widowed.’
In the scenario of a widow passing down a 1,000-acre estate after other allowances are used, this could mean £9million taxed at 20per cent, which would mean an inheritance tax bill of £1.8million.
Mr Lodge said: ‘Where is this money going to come from?
‘How does a business that generates £144,000 profit a year suddenly find £1.8million to cover the IHT on death, without selling off land and potentially breaking up the business?’