From Newsgroup: uk.media.radio.archers
On 7.4.26 09:58, Nick Odell wrote:
Not a problem that's likely to affect me or my family unless they
bring the IHT threshold down to around fifty quid but it does seem to
worry farmers in Ambridge and beyond.
Why? Why do they structure their businesses in such a way that
Inheritance Tax will be bound to bother them?
On the basis that they involve a lot of land with homes, storage and workshops with facilities open to the public, all on the premises I've
been browsing around some of the UK's family-run small airfields and
looking them up at Companies House. As far as I can tell, the
airfields are legal entities such as limited companies and have
directors who come and go from their boards but still often continue
to reside on the premises until they pop their clogs. And as far as I
can tell, when the individuals die they are taxed on their personal
wealth, not as a result of any part of the company value - just as is
the case with more conventional limited companies.
Or am I missing something here? Why don't (more) farmers structure
their businesses in a similar way?
Nick
Hi Nick
In simple terms:
Until it changed agricultural assets could be inherited without paying
any tax.
If you are a farmer called Brian you might own a farm worth -u20m
(totally random number of course). If you have a company which owns the
farm, you own an asset of -u20m. If you die that asset has to be taxed
at 40% because it is the asset - not the underlying land. So you pay
40% on the -u20m - -u800k pa for 10 years. Farms rarely make -u800k pa.
Hence the worry among farmers that they will sell land to pay the tax.
It is not entirely that simple (with tax it never is - ask Angela Rayner
about the dangers of not understanding owning a property when you don't
own a property but are still deemed to own it). I am not a tax expert
and there is a huge distinction between directors and shareholders in a
lot of cases.
However if we move to the fictional Brian allegedly there is a
partnership with shares split:
Brian 3 (plus I believe Jenny's 3)
Adam 2
Debbie 2
Alice 1
Kate 1
Rugrat 1
Total 13. Originally he did not put the land into the partnership
because of the liability for the poisoning of the Am. So he could sell
the farmhouse to pay his personal debt.
From the Sunday episode it sounds as if he has never carried out his
previous promise to put the land into the operating partnership and is planning to leave it to Adam plus his 3+3 shares.
So he broke a previous promise and I would not trust him to keep this one.
However I do wonder if the scriptwriters have any idea of the previous arrangement - as the position on Glebe Cottage appears to be in a
completely different situation to the one recalled by many listeners.
--
Kosmo Richard W
www.travelswmw.whitnet.uk
https://tinyurl.com/KRWpics
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