February 25, 2019

HMRC adds fizz to UK’s growing vineyards

HMRC has raised a glass to owners of the UK’s growing number of vineyards, confirming that vineyards do qualify for agricultural property relief (APR) and are therefore potentially free from inheritance tax.

HMRC updated its guidance in February to specifically list land used to grow grapes for wine as well as apples for cider as being eligible for APR.

The guidance from HMRC has always been rather cloudy when applying APR to vineyards and orchards. Until now, tax advisers have been unable to confirm with certainty that land used to grow grapes and apples for wine and cider would qualify. HMRC’s clarification is welcome and confirms the importance viticulture plays in UK agriculture.

HMRC’s confirmation will also see property investors raise their glasses providing opportunities for further tax planning, particularly for hobby farms.

The value of land suitable for viticulture, particularly in the South East where demand is high, is reaching upwards of £20,000 per acre, creating potential tax headaches for farmers wishing to cash in.

Farm owners selling land that once might have been worth £8,000 an acre but now achieving £20,000 or more could find themselves paying tax on the gains and a pot of cash that would fall into their estate for inheritance tax. They would do well to take tax advice before making any decisions.

Photo by David Köhler on Unsplash

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