Succession tenancies in England and Wales not subject to IHT
© Tim Scrivener Succession tenancies are not subject to inheritance tax (IHT), the Tenant Farmers Association (TFA) has clarified.
Although a tenancy may have statutory succession rights, the tenancies themselves are not assets that are inherited on death.
Where a successful succession application is made following the death of a tenant, a new tenancy is granted in the name of the applicant and the old tenancy ends.
The previous tenancy in the hands of the deceased tenant, therefore, has no value in the estate of the deceased tenant, and there would be no value to which inheritance tax would accrue, says the TFA.
See also: Changes to farm tenancy succession – what you need to know
Other business assets such as machinery, livestock, fixed equipment and crops in store inherited by a new tenant may be assessed for IHT as part of the deceased’s estate.
There are rare cases where a tenancy is let for a fixed term and the agreement provides for any unused fixed term to be transferred on death.
Such tenancies may attract inheritance tax but specific advice should be taken on this type of agreement as soon as possible following the death of the sitting tenant, advises the TFA.