Sussex Exclusive Magazine Edition II 2022

Inheritance
Tax
Agricultural Property Relief
for Vineyards and Wineries
A
great bottle of wine is a
wonderfully simple thing, at least
to the consumer! The issues for
a winemaker or the owner of a
vineyard are however much more
wide ranging.
Let’s focus on Inheritance Tax (“IHT”) which is
ordinarily payable at the rate of 40% on the assets
of an individual who has died, subject to the nil
rate band, currently £325,000, and any reliefs
available, which are discussed below. The reason
for this focus is of course that consideration
of the IHT consequences is an integral part of
succession planning for you and your vineyard or
winery.
HM Revenue and Customs (“HMRC”) have
confirmed Agricultural Property Relief (“APR”)
for IHT purposes has been extended to include
vineyards and wineries. Given the success of the
English wine industry, it is pleasing that the tax
code has caught up with the real world.
But first, what is APR?
In summary, APR is the tax relief given for IHT
purposes on land occupied for the purposes of
agriculture, together with related buildings and
houses used in conjunction with that land. There
are time ownership requirements: two years for
owner occupiers and seven years for tenanted
farmland.
There is then the rate of tax relief: 100% if the
land is in-hand or let on a Farm Business Tenancy
or if vacant possession can be obtained within
two years, and 50% in most other cases. The tax
legislation does not define “agriculture” but it
is normally taken to include horticulture, fruit
growing, rearing of livestock or fish, together
with any woodlands ancillary to the farming
operation.
What is the official guidance?
The guidance from HM Revenue and Customs
confirms horticulture includes “cultivation to
produce food for human and animal consumption”
with the clarification “’food’ in this context would
include, for example, grapes grown to produce wine
and apples grown to produce cider”.
Given the increasing acreage made over to wine
production in South East England, this is to be
much applauded. With Sussex and Surrey being
the perfect location to produce outstanding wine,
it is no wonder there are now over one hundred
wineries including a number of well-known
names such as, Ridgeview, Bolney, Wiston,
Tinwood and Rathfinny as well as others with an
international following.
So what does that all mean?
Whilst each of these businesses will benefit from
this clarification when assets are gifted in lifetime,
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