Advice needed: Gifting farm land vs cash to daughter

[Daviesmith]

Hi all, I’m in the middle of some inheritance tax planning. I’ve just sold a piece of agricultural land for £500k (held it for 10+ years). I want to give the money to my daughter now.
My accountant says if I give her the cash, I have to live 7 years or it’s taxed at 40%. But... if I use that money to buy other farmland and gift her the land instead, it might be exempt from IHT immediately because of "replacement relief."
It sounds a bit like a loophole—is this standard practice or is it more complicated than it sounds?

David

 

[DontAsk]

Either trust your accountant or get one you do, or take legal advice.

Do you not expect to live 7 years? I believe IHT tapers so it may not be 40% depending how long you live.

I would also be looking at the cost of a life policy, paying out to your daughter, to cover any IHT on your death. Not sure if that also has tax implications but it's worth looking at.

 

[Newchodge]

Hi all, I’m in the middle of some inheritance tax planning. I’ve just sold a piece of agricultural land for £500k (held it for 10+ years). I want to give the money to my daughter now.
My accountant says if I give her the cash, I have to live 7 years or it’s taxed at 40%. But... if I use that money to buy other farmland and gift her the land instead, it might be exempt from IHT immediately because of "replacement relief."
It sounds a bit like a loophole—is this standard practice or is it more complicated than it sounds?

David

Why would you pay an accountant for advice and then ignore it for advice from anonymous members of a forum?

 

[UK Contractor Accountant]

You seem to have muddled up Capital Gains Roll Over Relief and Agricultural Property Relief for IHT.

Go back to your Accountants and ask them to explain fully the taxes applying if you do not re-invest into qualifying business assets and gift hold over reliefs for CGT/IHT.

 

[MyAccountantOnline]

Hi all, I’m in the middle of some inheritance tax planning. I’ve just sold a piece of agricultural land for £500k (held it for 10+ years). I want to give the money to my daughter now.
My accountant says if I give her the cash, I have to live 7 years or it’s taxed at 40%. But... if I use that money to buy other farmland and gift her the land instead, it might be exempt from IHT immediately because of "replacement relief."
It sounds a bit like a loophole—is this standard practice or is it more complicated than it sounds?

David

As above I think you are confusing roll over relief which can enable you to defer Capital Gains Tax on some business assets sold with Inheritance tax

Please do discuss it with your accountant - that's what you are paying them for.