With the reduction of Agricultural Property Relief (APR) and Business Property Relief (BPR) to £1m per person, assets that were previously of less relevance such as livestock and deadstock, development or hope value and tenancy valuations are now a crucial part of the valuation process.
In a series of blog posts, I will review how sensible management of assets can inform and potentially reduce inheritance tax implications. The first area to look at is the valuation of livestock and deadstock.
Previously BPR would have meant that these assets received 100% relief from inheritance tax. From April 2026 they will fall into the estate and be taxed at 20% for anything over £1m. The first issue is that it is the market value of these assets at the date of death than is required, not the value presented in the accounts which is likely to be a discounted or depreciated value. These assets therefore need to be property inspected recorded and valued. It is also important to record any finance liability against these assets and provide a net figure.
It is then essential to consider the deceased person’s share of the ownership. This may be straight forward, but it is key to consider any partnership agreement and division of the assets. Typically, assets that are shared or within multiple ownership structures are subject to a percentage discount to their value, due to the complications of selling or managing the assets.
Making the best of the change to IHT will probably require the input of several professionals, with a land agent, tax advisor and solicitor working collaboratively. However, the starting point for mitigating the impact on a business is an informed valuation.