Farm cottage occupied by parttime worker

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Farmer partnership runs two seperate farms which are about 1 mile apart: one is dairy and the other is beef. Both farms are accounted for as a single business with a single bank account, suppliers' accounts, VAT registration etc. There's a farmhouse on each farm. Until recently both farmhouses were occupied by partners. The partner in the beef farm has died. The farmhouse is now occupied by an employee of the partnership. The employee works parttime on the farm and fulltime elsehwere in an industry that has no connection with farming. Though the employee lives in the house on the beef farm, he works exclusively on the dairy farm. Does the house occupied by the employee qualify as a farm cottage? The legislation at s169 IHTA 1984 refers to "cottages occupied by persons employed solely for agricultural purposes in connection with the property". The employee is not employed for agricultural purposes on that property at all: it is another property. It may be possible to move the employee's work to the beef farm (though maybe not because the labour requirement is on the milk farm) but even if we did, he would be employed parttime on that farm and fulltime elsewhere. Does the word "solely" in s169 refer to the work the employee does on the farm (ie he only does farm work for the partnership and not other work) or the work the employee does in the employee's entirety? I feel it is the former because otherwise farmers could get their residential tenants to notional parttime work and claim APR.

The employee used to be paid a wage of about £600 a month and paid rent of about £550 a month to the partnership. The employer and employee have agreed that no rent will be paid and instead the employee will be paid for whatever work he does above the value of the rent.

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By Tax Dragon
21st Jun 2019 13:57

S169 is about valuation. I can't see that the cottage in question would be valued in accordance with s169.

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Replying to Tax Dragon:
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By Vile Nortin Naipaan
21st Jun 2019 14:05

Isn't APR only available on the agricultural value? Implicitly, not falling within s 169 means that you do uplift the value of the cottage beyond its agricultural value?

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Replying to Vile Nortin Naipaan:
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By Tax Dragon
21st Jun 2019 14:31

I didn't really understand the question, but I agree with both your comments (the one above and the one below). In short, I think APR probably applies but probably doesn't cover the taxable value.

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Replying to Tax Dragon:
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By Tax Dragon
21st Jun 2019 14:44

For the avoidance of doubt, I don't agree with this comment of mine. But, if I'm going to promote a no edit policy, I have to be prepared to adopt that myself, hence I'm correcting myself by way of new comment, not by way of edit to an old comment.

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By Vile Nortin Naipaan
21st Jun 2019 14:20

On the "in connection with the property" point, it's the agricultural property that includes the cottages. And I'd take that to be all the agricultural property in the person's estate/being transferred. And I think it is a question of whether the person with the agricultural property is employing the individual solely for agricultural purposes in connection with that property. If the individual is moonlighting in Tescos, then it's irrelevant.

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Replying to Vile Nortin Naipaan:
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By Tax Dragon
21st Jun 2019 14:33

So in agreeing with this, I disagree with myself.

What a muppet.

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Replying to Tax Dragon:
Lone Wolf
By Lone_Wolf
21st Jun 2019 15:04

I'm sure the muppet persona got banned...

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By paul.benny
21st Jun 2019 15:42

kevinringer wrote:

The employee used to be paid a wage of about £600 a month and paid rent of about £550 a month to the partnership. The employer and employee have agreed that no rent will be paid and instead the employee will be paid for whatever work he does above the value of the rent.

You might want to check how this fits with the minimum wage. Unless there are special rules relating to job-related accommodation, it looks to be in breach.

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Replying to paul.benny:
Morph
By kevinringer
21st Jun 2019 16:54

paul.benny wrote:

You might want to check how this fits with the minimum wage. Unless there are special rules relating to job-related accommodation, it looks to be in breach.

The employee is part time and is being paid in accordance with the AWB (they're in Wales).
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By bettybobbymeggie
21st Jun 2019 19:20

I know it is only guidance, but part time employment is specifically mentioned here:

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm24034

"In cases where the occupier is still engaged in agricultural work the work does not necessarily have to be full-time."

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