As lockdown starts to ease, we are now starting to hear reports of an emergency budget for the beginning of July intended to outline a recovery plan and set out how the Government will pay for the unprecedented state support during the COVID-19 pandemic. Whilst many do not anticipate many tax raising measures at this stage, it seems likely that these will follow, perhaps in the Autumn budget.
There was much speculation ahead of the last budget that valuable IHT reliefs such as Agricultural Property Relief and Business Property Relief which can provide full exemption from IHT would be significantly reduced. For example, the current test for whether an asset qualifies for BPR is whether or not the business is “trading” seen as a 51/49 test. It was rumoured that this would be changed to match the higher threshold for CGT purposes where a business must be “substantially” trading, seen as an 80/20 test. However in the event, these reliefs remained unchanged. Agricultural Property Relief is similarly generous and is available on both land which is farmed in hand and let land (subject to the ownership periods being met). It may well be that in the future, the availability of APR on let land is removed or restricted in value.
Given that the Treasury now needs to raise substantial sums, it seems likely that these reliefs will be back in the spotlight with changes highly possible. If tax planning arrangements are being contemplated, now may be the ideal time to put these arrangements in place whilst the generous IHT reliefs are still fully available.