PTP's Tax Tip No 6 ' Does my country house qualify for APR?

Q - My client is a successful plumber (his company employs 20 other plumbers) and he has just bought a working farm of about 130 acres in Kent. His brother is a solicitor and has apparently told my client that his new home should be an effective IHT shelter. Is this right?

A - Maybe not. The land itself will almost certainly qualify for 100% APR and/or BPR on the whole of its value. However the farmhouse would only qualify for BPR to the extent that it is used for business purposes (either the farm or the plumbing business) and that is unlikely to be more than say 10%. In the past your client may have succeeded in obtaining APR on the agricultural value of the farmhouse (typically 70% of OMV) since it would appear to satisfy the statutory test and is of a character appropriate to the farm land. However in a recent case (Lloyds TSB Private Banking (personal representative of Rosemary Antrobus deceased) v Peter Twiddy) the Lands Tribunal decision indicated that a 'lifestyle' farmer might not qualify for APR on the farmhouse at all. Your client may be in need of some fresh estate planning advice.