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A stud farm is considered to be “farming” or “agriculture” for tax purposes and can therefore escape all death duties or inheritance tax (IHT) if structured correctly, according to chartered accountant Julie Butler of Butler and Co.
“However, the stud farm must be commercial — there must be both sales and advertising of youngstock,” she advised.
“Recent guidance from the tax office states that the relief will not be available for ‘a rich man’s hobby which is not carried out for gain’.
“The IHT reliefs available are agricultural property relief [APR] and business property relief [BPR], which leads on to your eventing interests.
If these are commercial and run as a business, this will help in the claim for BPR,” Julie said.
“There can be considerable tax advantages of a stud farm and it would be worthwhile taking professional tax advice before moving the idea forward.”
Butler and Co, tel: 01962 735544 www.butler-co.co.uk
This article was first published in Horse & Hound (17 December, ’09)
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