farmer died intestate

charb56

my friend lives with her mum and her father (who was married to her mother) has just died unexpectedly. they live on a small farm and her dad was retired a few years and continued to keep the farmhouse registered as a business address. he had they think about £250k in savings. the house was solely in the fathers name. they are terrified they wont have enough money to stay or pay inheritance tax with, and don't want to go to a solicitor until they have a better idea of their situation. as I understand it they may benefit from agricultural relief but don't really know, I have said I will post here for any advice anyone can offer, thanks!

Keep_pedalling

The rule of intestacy kick in here. The widow will inherit the first £250k of his estate the the remainder split between the widow and any children on a 50/50 basis.

Anything going to the widow is IHT exempt, and IHT would only be payable on the children’s share if it exceeds the nil rate band of £325k, so the estate would need to be over £900k for IHT to effect it, and even then the farm is likely to be subject to agricultural relief.

Even if IHT is applicable it can be avoided through passing more of the estate via a deed of variation to the widow.

theoretica

Was this a working farm? Farmland has special inheritance tax status.

charb56

it is a working agricultural farm , the land has been rented out to a neighbouring farmer since retirement and the house is the office, all the utility bills are business rather than residential in the house

charb56

sorry meant arable,not agricultural

Keep_pedalling

A working farm will be exempt, so there is unlikely to be any IHT involved. The estate is likely to need some professional assistance to wind up, and I would start by totalling to the deceased persons accountant, assuming they had one.

charb56

yes they did, thanks

Yorkshireman99

Keep_pedalling wrote: »

The rule of intestacy kick in here. The widow will inherit the first £250k of his estate the the remainder split between the widow and any children on a 50/50 basis.

Anything going to the widow is IHT exempt, and IHT would only be payable on the children’s share if it exceeds the nil rate band of £325k, so the estate would need to be over £900k for IHT to effect it, and even then the farm is likely to be subject to agricultural relief.

Even if IHT is applicable it can be avoided through passing more of the estate via a deed of variation to the widow.

There is no IHt on farmland including the house so IHT but it is important that they see a STEP qualified solicitor ASAP to ensure no future IHT.

Keep_pedalling

Yorkshireman99 wrote: »

There is no IHt on farmland including the house so IHT but it is important that they see a STEP qualified solicitor ASAP to ensure no future IHT.

Or keep the farm operating.

Yorkshireman99

Keep_pedalling wrote: »

Or keep the farm operating.

Even if the land is rented out for farming it still qualifies so the widow can remain in her home and enjoy the rental income. No need for DOV.

Tom99

Further detail here:
https://www.gov.uk/guidance/agricultural-relief-on-inheritance-tax